83_FR_27766 83 FR 27652 - United States of America v. Bayer AG and Monsanto Company; Proposed Final Judgment and Competitive Impact Statement

83 FR 27652 - United States of America v. Bayer AG and Monsanto Company; Proposed Final Judgment and Competitive Impact Statement

DEPARTMENT OF JUSTICE
Antitrust Division

Federal Register Volume 83, Issue 114 (June 13, 2018)

Page Range27652-27680
FR Document2018-12202

Federal Register, Volume 83 Issue 114 (Wednesday, June 13, 2018)
[Federal Register Volume 83, Number 114 (Wednesday, June 13, 2018)]
[Notices]
[Pages 27652-27680]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-12202]



[[Page 27651]]

Vol. 83

Wednesday,

No. 114

June 13, 2018

Part II





Department of Justice





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Antitrust Division





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United States of America v. Bayer AG and Monsanto Company; Proposed 
Final Judgment and Competitive Impact Statement; Notice

Federal Register / Vol. 83 , No. 114 / Wednesday, June 13, 2018 / 
Notices

[[Page 27652]]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States of America v. Bayer AG and Monsanto Company; 
Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16(b)-(h), that a proposed Final 
Judgment, Stipulation and Order, and Competitive Impact Statement have 
been filed with the United States District Court for the District of 
Columbia in United States of America v. Bayer AG and Monsanto Company, 
Civil Action No. 1:18-cv-1241. On May 29, 2018, the United States filed 
a Complaint alleging that Bayer AG's proposed acquisition of Monsanto 
Company would violate Section 7 of the Clayton Act, 15 U.S.C. Sec.  18. 
The proposed Final Judgment, filed at the same time as the Complaint, 
requires Bayer AG to divest a substantial collection of assets relating 
to seeds and traits, crop protection, and digital agriculture.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's website at http://www.justice.gov/atr and at the Office of 
the Clerk of the United States District Court for the District of 
Columbia. Copies of these materials may be obtained from the Antitrust 
Division upon request and payment of the copying fee set by Department 
of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, including the name of the submitter, and 
responses thereto, will be posted on the Antitrust Division's website, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be mailed to Kathleen S. O'Neill, 
Chief, Transportation, Energy & Agriculture Section, Antitrust 
Division, Department of Justice, 450 5th Street NW, Suite 8000, 
Washington, DC 20530.

Patricia A. Brink,
Director of Civil Enforcement.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    United States of America, 450 5th Street NW, Suite 8000, 
Washington, DC 20530, Plaintiff, v. Bayer AG, Kaiser-Wilhelm-Allee 
1, Leverkusen, Germany 51368, and Monsanto Company, 800 North 
Lindbergh Boulevard, St. Louis, MO 63167, Defendants.

Civil Action No.: 1:18-cv-1241
Judge James E. Boasberg

COMPLAINT

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil antitrust 
action to prevent Bayer AG from acquiring Monsanto Company. The United 
States alleges as follows:

I. INTRODUCTION

    1. Bayer's proposed $66 billion acquisition of its rival, Monsanto, 
would combine two of the largest agricultural companies in the world. 
Across the globe, Bayer and Monsanto compete to sell seeds and 
chemicals that farmers use to grow their crops. This competition has 
bolstered an American farming industry that contributes hundreds of 
billions of dollars a year to the economy, provides millions of jobs 
across the country, and ensures a safe and reliable food supply for 
consumers in the United States and around the world.
    2. If allowed to proceed, the proposed acquisition would transform 
the agricultural industry and harm competition across a broad range of 
products. Most prominently, the acquisition would eliminate competition 
to develop and sell genetically modified seeds in cotton, canola, and 
soybeans--three of the largest crops grown in the United States--and 
the herbicides that are paired with these seeds to form the foundation 
of farmers' weed-control strategies.
    3. These agricultural technologies emerged in the 1990s when 
Monsanto introduced ``Roundup Ready'' soybeans, which were genetically 
engineered to resist Monsanto's herbicide, Roundup. Monsanto's 
invention allowed farmers who planted Roundup Ready soybeans to spray 
Roundup over the top of their crops, thereby killing the weeds without 
harming the crops. It was a wildly popular invention; by 2005, almost 
90% of U.S. soybean acres were planted with Roundup Ready seeds. In 
response, in 2009, Bayer launched its own ``LibertyLink'' genetically 
modified soybeans, which were engineered to withstand Bayer's Liberty 
herbicide. Both companies have introduced similar innovations in cotton 
and canola, generating competition that has resulted in higher crop 
yields, lower prices, and greater choice for American farmers. Today, 
Bayer's weed-control systems are the only competitive alternatives to 
Monsanto's Roundup Ready systems in cotton, canola, and soybeans.
    4. Bayer and Monsanto also compete head-to-head to develop the next 
generation of transformative products, including cotton, canola, and 
soybean seeds with new genetically modified traits, as well as other 
innovative products that improve yields for farmers. This competition 
is central to their businesses. Monsanto's chief technology officer has 
said that innovation is ``the heart and soul of who we are.'' 
Similarly, Bayer's core strategy is to become the ``most innovative'' 
agricultural company in the world. Both companies invest significant 
sums of money into research and development and monitor each other's 
efforts, spurring each other to work faster and invest more to improve 
their offerings and develop new products. For instance, Monsanto 
recently developed a seed treatment product that protects crops from 
destructive worms called nematodes, directly challenging Bayer's 
historic dominance in that space. The proposed acquisition would 
eliminate this competition to develop new products that farmers will 
depend on for decades into the future.
    5. The merger would also substantially lessen competition through 
the vertical integration of the two companies. Specifically, by 
combining Monsanto's strong position in seeds with Bayer's dominant 
position in certain seed treatments, the merger would give the combined 
company the incentive and ability to harm its seed rivals by raising 
the price of those seed treatments--a key input for genetically 
modified seeds. For example, today, Bayer sells the only seed treatment 
that effectively controls a destructive pest called corn rootworm. 
Because Bayer does not sell corn seeds itself, it has a strong 
incentive to sell that seed treatment to all corn seed companies, 
including Monsanto's rivals. But the merger would change the calculus 
for Bayer because it would now own Monsanto, the largest supplier of 
corn seeds in the United States. Armed with Monsanto's strong position 
in corn seeds, the merged company would likely charge its seed rivals 
more for the seed treatment, knowing that they rely on the product and 
would be less able to compete effectively without it.
    6. Finally, the merger would eliminate head-to-head competition 
between Bayer and Monsanto to develop and sell seeds for five types of 
vegetables: tomatoes, carrots, cucumbers, onions, and watermelons. 
Although vegetable seeds are not genetically modified like cotton, 
canola, and soybeans, Bayer and Monsanto compete aggressively with one 
another to breed higher-quality and higher-yielding varieties.
    7. By eliminating competition between Bayer and Monsanto and 
combining their businesses, the proposed acquisition would result in

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higher prices, less innovation, fewer choices, and lower-quality 
products for farmers and consumers throughout the United States and 
around the world. To prevent those harms, this unlawful acquisition 
should be enjoined.

II. DEFENDANTS AND THE TRANSACTION

    8. Bayer is a life-sciences company based in Leverkusen, Germany. 
The company employs nearly 100,000 people worldwide and has operations 
in almost 80 countries. Bayer has three main business lines: 
pharmaceuticals, which focuses on prescription medicines; consumer 
health, which focuses on over-the-counter products; and its 
agricultural business, Bayer Crop Science. Over the past decade, Bayer 
Crop Science has become one of the largest global agricultural 
companies. Today, its crop protection business is the second largest in 
the world, and its seeds and traits business is also among the world's 
largest. In 2016, Bayer Crop Science had about $12 billion in annual 
revenues.
    9. Monsanto, based in St. Louis, Missouri, is also a leading 
producer of agricultural products. Monsanto employs more than 20,000 
people in almost 70 countries. As noted, in the 1990s, Monsanto 
pioneered a revolutionary technology that enables certain crops to 
resist exposure to glyphosate, the active ingredient in Monsanto's 
Roundup herbicide. This technology propelled Monsanto's success: today, 
Monsanto is the leading global producer of seeds and traits and is 
among the world's largest producers of crop protection products. In 
2017, Monsanto had almost $15 billion in annual revenues.
    10. On September 14, 2016, Bayer agreed to acquire Monsanto for 
approximately $66 billion.

III. JURISDICTION AND VENUE

    11. The United States brings this action, and the Court has 
subject-matter jurisdiction, under Section 15 of the Clayton Act, 15 
U.S.C. Sec.  25, to prevent and restrain Defendants from violating 
Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.
    12. Defendants are engaged in, and their activities substantially 
affect, interstate commerce. Bayer and Monsanto sell agricultural 
products, including seeds and crop protection products, throughout the 
United States and the world.
    13. Defendants have consented to venue and personal jurisdiction in 
this district. Venue is also proper under Section 12 of the Clayton 
Act, 15 U.S.C. Sec.  22, and 28 U.S.C. Sec.  1391.

IV. RELEVANT MARKETS

    14. As noted, Bayer and Monsanto compete across a broad range of 
agricultural products, including genetically modified (GM) seeds and 
traits for row crops; crop protection products, such as herbicides and 
seed treatments; and vegetable seeds. The proposed acquisition would 
substantially lessen competition in the following 17 products:

Bayer-Monsanto: Relevant Products

GM Seeds and Traits
Cotton:
     Herbicide-tolerant traits
     Insect-resistant traits
     GM cotton seeds
Canola:
     Herbicide-tolerant traits
     GM canola seeds
Soybeans:
     Herbicide-tolerant traits
     GM soybeans
Corn:
     GM corn seeds

Crop Protection
Foundational herbicides
Nematicidal seed treatments:
     Corn
     Soybeans
     Cotton

Vegetables
     Carrot seeds
     Cucumber seeds
     Onion seeds
     Tomato seeds
     Watermelon seeds

    15. Each of these products is a relevant product and line of 
commerce under Section 7 of the Clayton Act, 15 U.S.C. Sec.  18. The 
industry views these products as separate business lines, and they 
satisfy the well-accepted hypothetical monopolist test in the U.S. 
Department of Justice and Federal Trade Commission Horizontal Merger 
Guidelines, which asks whether a hypothetical monopolist likely would 
impose at least a small but significant and non-transitory increase in 
price. Such a price increase for these products would not be defeated 
by substitution to alternative products.
    16. The relevant geographic markets in this case vary by product. 
For seeds and traits generally, the markets are regional because seeds 
are tailored to regional growing conditions (such as weather and soil 
type) and suppliers can charge different prices for seeds and traits to 
customers in different regions. With the exception of soybeans, 
however, virtually all of the regions affected by the merger have a 
similar market structure, so in this case it is appropriate to 
aggregate them to a national level for convenience. For soybeans, the 
market structure differs across regions; thus, the relevant geographic 
market is the southern United States, where Bayer has focused its 
soybean breeding program and been particularly successful.
    17. For the relevant crop protection products (foundational 
herbicides and nematicidal seed treatments), the geographic markets are 
national. Bayer and Monsanto sell these products throughout the United 
States. In addition, these products require U.S. regulatory approval, 
which is expensive and time-consuming, so competition is limited to 
products that have obtained the necessary approvals. Similar products 
sold in other countries but not approved for use in the United States 
are not reasonable substitutes for American farmers.
    18. For these reasons, in each of the relevant geographic markets 
for seeds and crop protection products, a hypothetical monopolist 
likely would impose at least a small but significant and non-transitory 
increase in price.
    19. Most of the relevant markets are already highly concentrated, 
and in each market the merger would significantly increase 
concentration. The more concentrated a market and the more a 
transaction increases concentration in that market, the more likely it 
is that the transaction will reduce competition. Concentration is 
typically measured by market shares and by the widely-used Herfindahl-
Hirschman Index (HHI). If the post-transaction HHI would be more than 
2,500 and the change in HHI more than 200, the transaction is presumed 
to enhance market power and substantially lessen competition. See, 
e.g., United States v. Anthem, Inc., 855 F.3d 345, 349 (D.C. Cir. 
2017). Given the high concentration levels and increases in 
concentration in the relevant markets in this case, the proposed 
acquisition presumptively violates Section 7 of the Clayton Act.

A. Genetically Modified Seeds and Traits

    20. Several markets in this case involve genetically modified seeds 
and traits. A genetic trait is simply an attribute of a plant, such as 
being tall, short, or leafy. Most traits derive from a plant's natural 
DNA. Over the last 30 years, however, a small set of highly 
sophisticated biotechnology firms--including Bayer and Monsanto--have 
successfully inserted DNA from other organisms into the DNA of certain 
crops, giving the crops a desirable trait associated with that non-
native DNA. For example, scientists have developed traits that make 
crops resistant to certain

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pests, allowing farmers to reduce their use of chemical insecticides. 
And scientists have developed herbicide-tolerant traits that make crops 
resistant to herbicides like Roundup, allowing a farmer to spray the 
herbicide over an entire field and kill the weeds without harming the 
crops. A genetically modified seed is simply a seed that contains DNA--
and hence the desirable trait--of a different organism. Farmers have 
embraced this technology: today, more than 90% of the corn, soybeans, 
cotton, and canola seeds grown in the United States are genetically 
modified. These seeds provide farmers with considerable savings in 
labor and expense, increased yields, and reduced soil erosion by 
eliminating the need for tilling fields. Thus, a vast majority of 
farmers do not view conventional seeds as a reasonable substitute.
    21. With the rise of genetically modified crops, it has also become 
harder for smaller companies, which lack the massive resources 
necessary to devote to research and development, to compete in these 
high-tech markets. It typically takes hundreds of millions of dollars 
and more than a decade to bring a genetically modified seed variety or 
a new pesticide to market. A company must also have access to an 
extensive library of high-quality seeds that are necessary for research 
and plant breeding. Today, such resources are increasingly controlled 
by four vertically integrated companies: Monsanto, Bayer, DowDuPont, 
and Syngenta, also known as the ``Big Four.'' Although smaller 
independent seed companies also sell genetically modified seeds to 
farmers, most of those companies license traits and seed varieties from 
Monsanto, limiting their ability to compete.
    22. As described below, Bayer and Monsanto are close competitors in 
three important row crops: cotton, canola, and soybeans.

(1) Genetically modified cotton

    23. Cotton is a major crop grown across the southern United States, 
particularly in states like Texas and Georgia. Cotton seeds are widely 
used in vegetable oil, packaged foods, and animal feed, and cotton 
fibers are widely used in clothing. In 2017, U.S. farmers planted about 
12 million acres of cotton and sales of cotton seeds totaled over $800 
million. For cotton, the proposed acquisition would harm competition in 
the markets for (1) genetically modified cotton seeds, (2) herbicide-
tolerant traits for cotton, and (3) insect-resistant traits for cotton.
    24. GM cotton seeds. Bayer and Monsanto have long been the two 
leading suppliers of genetically modified cotton seeds throughout the 
United States. In addition to owning critical traits (discussed below), 
they own extensive libraries of elite seed varieties, which are 
essential for developing and commercializing competitive cotton seeds. 
If the transaction is allowed to proceed, Bayer and Monsanto would have 
a combined 59% share of genetically modified cotton seeds in the United 
States. The post-transaction HHI would be approximately 4,100, with an 
increase of approximately 1,500 resulting from the transaction.
    25. Herbicide-tolerant traits. Given the widespread adoption of 
genetically modified cotton seeds, herbicide-tolerant traits are now 
used on approximately 98% of the cotton acres in the United States. In 
2017, Bayer and Monsanto accounted for virtually all of those acres, 
with about 19% of acres containing Bayer's traits and about 80% 
containing Monsanto's traits. The merger would thus give Bayer a 
monopoly in these markets: the post-transaction HHI would be 
approximately 9,600, with an increase of approximately 3,000. Bayer and 
Monsanto are also competing aggressively to develop the next generation 
of herbicide-tolerant cotton traits. Farmers need these innovations to 
combat the growing number of weeds, like pigweed, that have become 
increasingly resistant to glyphosate in recent years. Without the 
merger, these new traits would likely compete in the future.
    26. Insect-resistant traits. Bayer and Monsanto also compete for 
sales of insect-resistant traits that protect cotton from destructive 
pests such as moth and bollworm larvae. In 2017, insect-resistant 
traits were used on approximately 88% of the cotton acres in the United 
States. Bayer and Monsanto accounted for approximately 85% of those 
acres, with about 10% of acres containing Bayer's traits and about 75% 
containing Monsanto's traits. The post-transaction HHI would be 
approximately 7,400, with an increase of approximately 1,400.

(2) Genetically modified canola

    27. Canola is an important crop used in vegetable oil, packaged 
foods, biodiesel fuels, and animal feed. In the United States, canola 
is grown on approximately 1.7 million acres, mainly in North Dakota, 
but also in several other states. The proposed merger would harm 
competition in the markets for (1) genetically modified canola seeds 
and (2) herbicide-tolerant traits for canola.
    28. GM canola seeds. In 2016, genetically modified canola seeds 
accounted for $83 million in sales in the United States, and virtually 
all canola seeds contain genetically modified traits. Bayer's canola 
innovations in recent years have allowed it to surpass Monsanto. In 
2016, Bayer's share of genetically modified canola seeds in the United 
States was 60% and Monsanto's share was 14%. The post-transaction HHI 
would be approximately 5,600, with an increase of approximately 1,700.
    29. Herbicide-tolerant traits. Bayer and Monsanto are even more 
dominant in herbicide-tolerant traits for canola, where they have a 
combined share of 95%. Virtually all canola seeds planted in the United 
States contain either Bayer's LibertyLink trait or Monsanto's Roundup 
Ready trait. For these traits, the post-transaction HHI would be 
approximately 9,200, with an increase of over 4,100.

(3) Genetically modified soybeans

    30. After corn, soybeans are the largest crop grown in the United 
States. Soybeans are widely used in vegetable oil, packaged foods, and 
animal feed. In 2017, U.S. farmers planted almost 90 million acres of 
soybeans, accounting for $4.6 billion in seed purchases, and 94% of 
those acres contained herbicide-tolerant traits. The proposed 
acquisition would harm competition in the markets for (1) genetically 
modified soybeans and (2) herbicide-tolerant traits for soybeans.
    31. GM soybeans. Since launching genetically modified soybeans in 
the 1990s, Monsanto has been the market leader. For years, Monsanto's 
only competitors were companies that relied on Monsanto for licenses to 
the Roundup Ready traits. Since 2009, however, Bayer has emerged as a 
serious threat: it has invested over $250 million to develop an 
independent source of soybean varieties and in 2014 launched its own 
soybean business, Credenz, which sells varieties that perform well in 
the southern United States. In 2017, Bayer had a 6% share of soybeans 
in that region and Monsanto had a 39% share. The post-transaction HHI 
in the southern United States would be approximately 2,800, with an 
increase of approximately 500.
    32. Herbicide-tolerant traits. Bayer and Monsanto also have the 
leading herbicide-tolerant traits for soybeans. Monsanto's Roundup 
Ready trait has historically dominated sales, but in recent years 
Bayer's LibertyLink trait has made inroads. In 2017, Monsanto had a 67% 
share of U.S. sales and Bayer's share had risen to 14%. (The

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remaining market participants use a post-patent version of the original 
Roundup Ready trait.) For herbicide-tolerant traits, the post-
transaction HHI would be approximately 6,900 on a national basis, with 
an increase of approximately 1,900. Without the merger, competition 
between the two companies would likely increase: Bayer and Monsanto 
each have new traits in their research pipelines that would confer 
tolerance to additional herbicides and compete in the future.

B. Foundational Herbicides

    33. In addition to competing to sell herbicide-tolerant seeds, 
Bayer and Monsanto also compete to sell the foundational herbicides--
glyphosate and glufosinate--that are paired with these seeds.
    34. Foundational herbicides are herbicides used on row crops that 
have two defining characteristics. First, they are ``non-selective,'' 
meaning that they kill all types of weeds, thus providing farmers with 
the broadest possible protection for their crops. In contrast, other 
types of herbicides are ``selective,'' meaning that they kill only 
certain types of weeds. Selective herbicides are often used to 
supplement non-selective herbicides but are not generally used in lieu 
of them. Second, foundational herbicides can be paired with seeds that 
are engineered to tolerate the herbicide. Other non-selective 
herbicides are not a substitute for farmers because no seeds are 
engineered to withstand them, so spraying those herbicides over a crop 
would damage it. For these reasons, farmers have no good substitutes 
for foundational herbicides. Today, glyphosate and glufosinate are the 
only two foundational herbicides, but, as discussed further below, new 
foundational herbicides are in development.
    35. Bayer and Monsanto are the world's leading producers of 
foundational herbicides. As noted above, glyphosate was developed by 
Monsanto and is the active ingredient in Roundup; glufosinate was 
developed by Bayer and is the active ingredient in Liberty. Since the 
launch of genetically modified crops in the 1990s, Monsanto's Roundup 
has dominated the market. As some weeds have developed resistance to 
glyphosate, however, farmers are increasingly turning to Liberty. And 
while glufosinate and glyphosate are now off patent, competition from 
generic suppliers has not prevented Bayer and Monsanto from maintaining 
branded price premiums. In 2017, Bayer had a 7% share of the market for 
foundational herbicides in the United States, and Monsanto had a 53% 
share. Thus, this market is already highly concentrated and the merger 
would result in a post-transaction HHI of approximately 3,700, with an 
increase of over 650.
    36. Going forward, competition between Bayer and Monsanto to 
develop next-generation weed-management systems is likely to increase. 
According to a Bayer strategy document, the company's number one ``Must 
Win Battle'' is to ``[e]stablish LibertyLink as a foundation trait for 
broadacre [row] crops and position Liberty herbicide as the superior 
weed management tool.'' Bayer is also developing new non-selective 
herbicides for soybeans and corn called N,O-Chelators (NOCs), along 
with traits conferring tolerance to NOCs. If successful, NOCs would 
form the basis of a new foundational herbicide system that would rival 
Monsanto's Roundup Ready-based systems.
    37. Likewise, Monsanto is actively pursuing innovations in 
foundational herbicides. For example, Monsanto is developing an 
improved formulation of Roundup that is expected for release in 2019. 
Bayer's and Monsanto's incentives to independently pursue these future 
products in close competition with each other would disappear post-
merger.

C. Seed Treatments

    38. In addition to relying on genetically modified seeds and 
herbicides, farmers also protect their crops using seed treatments, 
which are coatings applied to seeds before they are planted. Seed 
treatments are a critical tool for modern farmers, and today at least 
one seed treatment is applied to the vast majority of genetically 
modified seeds grown in the United States. Multiple seed treatments can 
be applied to a seed to protect it from various threats; seed 
treatments designed for one purpose (such as killing insects) are 
rarely an effective substitute for seed treatments designed for a 
different purpose (such as controlling fungal diseases).
    39. The merger would likely result in three forms of competitive 
harm related to seed treatments: (1) the loss of head-to-head 
competition between Bayer's and Monsanto's nematicidal seed treatments; 
(2) foreclosure effects resulting from the combination of Monsanto's 
strong position in corn seeds with Bayer's dominant position in 
insecticidal seed treatments for corn rootworm; and (3) foreclosure 
effects resulting from the combination of Monsanto's strong position in 
soybeans with Bayer's dominant position in fungicidal seed treatment 
for sudden death syndrome.

(1) Nematicidal seed treatments for corn, cotton, and soybeans

    40. The merger would eliminate head-to-head competition for 
nematicidal seed treatments used on corn, cotton, and soybeans. 
Nematicidal seed treatments protect crops from parasitic roundworms 
known as nematodes. For corn, cotton, and soybean farmers, there are no 
cost-effective alternatives to nematicidal seed treatments. And, in 
part because seed treatments must be registered on a crop-by-crop 
basis, the treatments for each crop constitute a separate market.
    41. All three nematicidal seed treatment markets are highly 
concentrated. For years, Bayer has had a monopoly in the market for 
nematicidal seed treatments for corn, with over a 95% share in 2017. 
Bayer dominates the market for nematicidal seed treatments for 
soybeans, with a share over 85%. And, in the market for nematicidal 
seed treatments for cotton, Bayer and Syngenta currently share a 
duopoly.
    42. Although Monsanto does not currently sell in this market, it is 
poised to launch its first nematicidal seed treatment, NemaStrike. 
NemaStrike is expected to challenge Bayer's market position in 
nematicidal seed treatments in all three crops--corn, cotton, and 
soybeans. Both Bayer and Monsanto project that NemaStrike will capture 
significant market share from Bayer. By acquiring Monsanto, Bayer would 
thus eliminate the most significant competitive threat to its dominant 
position in these markets, to the detriment of farmers who rely on 
these important products to protect their crops.

(2) Vertical foreclosure--insecticidal seed treatments for corn 
rootworm and genetically modified corn seeds

    43. The merger would also likely harm competition in the market for 
genetically modified corn by combining Monsanto's strong position in 
genetically modified corn seeds with Bayer's dominant position in 
insecticidal seed treatments for corn rootworm.
    44. Corn is the largest crop grown in the United States, accounting 
for over $8 billion in seed sales annually. The vast majority (92%) of 
U.S. corn seeds are genetically modified. Monsanto is the leading 
supplier of those seeds, effectively controlling 50% of the market 
between sales of its own branded seeds and sales through its licensees. 
Monsanto's only significant rival for corn seed is DowDuPont (with a 
34%

[[Page 27656]]

share); a few smaller companies also have a small share.
    45. Although Bayer does not sell corn seeds, it does sell a 
critical seed treatment called Poncho. When Poncho is applied at a high 
rate (with a greater amount of the seed treatment coating per seed), it 
protects corn seeds from corn rootworm--a pest nicknamed ``the billion 
dollar bug'' for the amount of loss it costs farmers each year. Poncho 
is the only significant seed treatment that effectively combats corn 
rootworm. Thus, most of Monsanto's corn seed rivals depend on Poncho 
and are expected to become more dependent as the corn rootworm problem 
grows.
    46. By placing Bayer's Poncho and Monsanto's leading GM corn seed 
under the control of one company, the transaction would give the merged 
company the incentive and ability to foreclose its corn seed rivals who 
lack their own seed treatment product and rely on an independent Bayer 
for their seed treatment supply. Specifically, the merged company would 
likely hinder its corn seed rivals by forcing them to pay more for 
Poncho or by denying them access to it entirely. This loss of 
competition would ultimately hit the pocketbooks of American farmers. 
By making it harder for Monsanto's corn rivals to compete, farmers 
would pay higher prices and have fewer effective choices for 
genetically modified corn seeds throughout the country.

(3) Vertical foreclosure--fungicidal seed treatments for sudden death 
syndrome and genetically modified soybeans

    47. Similarly, the merger would harm competition by combining 
Monsanto's leading position in genetically modified soybeans with 
Bayer's dominant position in fungicidal seed treatments.
    48. As discussed above, Monsanto leads the market for genetically 
modified soybeans. It is followed by DowDuPont, with Bayer emerging as 
a threat and investing heavily to gain share. Smaller players, such as 
Beck's, also serve the market.
    49. Bayer also sells ILeVO, the only seed treatment that 
effectively protects soybeans from a fungal disease called sudden death 
syndrome (SDS). According to Bayer, SDS costs farmers an average of 
over 44 million bushels in lost yield per year, and losses from SDS 
damage are expected to increase, making Bayer's seed treatment a 
critical tool for farmers in areas where SDS is a particular risk. 
Bayer sells ILeVO to Monsanto's soybean rivals, including DowDuPont and 
Beck's. Since the launch of ILeVO in 2015, Bayer's sales of ILeVO have 
doubled annually and are expected to continue to grow steadily over the 
next decade.
    50. If allowed to proceed, the merger would combine Monsanto's 
leading genetically modified soybeans with a key input used on those 
seeds (ILeVO). As a result, the merged company would likely hinder its 
soybean rivals by forcing them to pay more for ILeVO or by denying them 
access to it entirely. This loss of competition would likewise make it 
harder for Monsanto's rivals to compete, and it would result in higher 
prices and fewer choices for genetically modified soybeans.

D. Vegetable Seeds

    51. Finally, the proposed acquisition would eliminate vital 
competition between Bayer and Monsanto for the sale of vegetable seeds. 
In the past 25 years, global vegetable production has doubled as 
breeders have developed new varieties of vegetables with better disease 
resistance and higher yields. Unlike with row crops, however, these 
improvements are due entirely to traditional plant breeding rather than 
genetic modification. Bayer and Monsanto are leaders in these efforts. 
Today, Monsanto is the largest vegetable seed company in the world and 
Bayer is fourth largest. If the merger is allowed to proceed, the 
combined company would dominate the industry, with global sales 
rivaling the combined sales of the second- and third-largest vegetable 
producers (Syngenta and Limagrain, respectively). In the United States, 
the merger would harm competition for five distinct vegetable species: 
carrots, cucumbers, onions, tomatoes, and watermelons.

(1) Carrot seeds

    52. In the United States, Bayer and Monsanto are the dominant 
producers of carrot seeds with a combined market share of approximately 
94%. The post-transaction HHI would be approximately 8,800, with an 
increase of approximately 4,000 resulting from the transaction.
    53. While competition would be harmed in the market for carrot 
seeds as a whole, the effects of the acquisition would be particularly 
acute in the ``cut-and-peel'' carrot segment, which consists of certain 
carrot varieties that are processed and sold as ready-to-eat baby 
carrots. Bayer and Monsanto are particularly close competitors in this 
segment, which constitutes approximately 80% of all carrots consumed in 
the United States.

(2) Cucumber seeds

    54. The market for cucumber seeds is also highly concentrated, with 
Bayer and Monsanto dominating the market with 34% and 56% market 
shares, respectively. The post-acquisition HHI would be approximately 
7,900, with an increase of approximately 3,700.
    55. The effects of the acquisition would be particularly 
significant in the pickling cucumber seed segment, which makes up a 
large majority of cucumber acres in the United States. Bayer and 
Monsanto are two of only three suppliers of pickling cucumber seeds in 
the United States, with Monsanto as the dominant competitor, followed 
by Bayer and a company called Rijk Zwaan, based in the Netherlands. As 
in other markets, Bayer has competed against Monsanto in this segment 
through innovation, developing seedless varieties of pickling cucumbers 
to compete with Monsanto's seeded varieties.

(3) Onion seeds

    56. Bayer and Monsanto are the two largest onion seed producers in 
the United States and globally, with substantial sales across a wide 
variety of onion segments. The U.S. market for onion seeds is already 
highly concentrated--besides Bayer and Monsanto, the only other 
producers are Bejo Zaden B.V., based in the Netherlands, and American 
Takii, Inc., based in California. The merger would give the combined 
company a share of approximately 71%. The post-transaction HHI would be 
approximately 5,000, with an increase of approximately 2,500.

(4) Tomato seeds

    57. Bayer and Monsanto are two of the largest producers of tomato 
seeds in the United States, with market shares of 21% and 34%, 
respectively. The market for tomato seeds is moderately concentrated, 
and the merger would result in a highly concentrated market. The post-
transaction HHI would be approximately 3,000, with an increase of 
approximately 1,400.

(5) Watermelon seeds

    58. Lastly, the watermelon seed market is already highly 
concentrated, with Bayer and Syngenta, followed by Monsanto, as the 
largest suppliers in the United States. Bayer has a 37% market share in 
watermelon seeds, and Monsanto has a 6% share. As a result, the post-
acquisition HHI would be approximately 3,300, with an increase of 
approximately 400. Monsanto's market share in watermelon seeds 
understates its competitive significance; its recent introduction of 
competitive seedless watermelon varieties, which are in high demand and 
already offered

[[Page 27657]]

by Monsanto's competitors, would significantly improve its position 
going forward.

V. ANTICOMPETITIVE EFFECTS

    59. The proposed acquisition would substantially lessen competition 
and harm consumers in each of the relevant markets, either by 
eliminating head-to-head competition between Bayer and Monsanto or, in 
the case of certain seed treatments, raising the price of a key input. 
In each of these markets, the merger would likely result in higher 
prices, lower quality, and reduced choice. The price effects in these 
markets would likely result in hundreds of millions of dollars per year 
in harm, raising costs to farmers and consumers throughout the United 
States.
    60. But the harm does not stop there. The merger would also have a 
significant impact on innovation. Today, four companies dominate the 
industry's research and development efforts for seeds and traits. Bayer 
and Monsanto are the industry leaders, with Bayer emerging as a threat 
to Monsanto's dominance. In 2016, for example, Bayer spent more on 
seeds-related research and development as a percentage of sales than 
any of the other Big Four. As leading innovators, Bayer and Monsanto 
push each other to improve their current products and technologies, 
monitor each other's research efforts, and compete to develop new 
blockbuster products.
    61. Without the merger, this competition would intensify as both 
companies pursue what the industry refers to as integrated solutions--
combinations of seeds, traits, and crop protection products, supported 
by digital-farming technologies and other services. Although integrated 
solutions are still evolving, it is widely believed that only the Big 
Four companies--each with its own unique strengths--will be able to 
offer fully integrated solutions to farmers. With this merger, that 
competition would be lost.

VI. ABSENCE OF COUNTERVAILING FACTORS

    62. Entry would not prevent the merger's likely anticompetitive 
effects. It takes many years and hundreds of millions of dollars to 
discover new crop protection chemicals and to develop and commercialize 
new traits. Once a new trait has been discovered, companies cannot 
successfully incorporate that trait and sell seeds without access to 
the extensive libraries of elite seed varieties that are already owned 
by Bayer, Monsanto, and a small number of other companies. As Bayer's 
and Monsanto's executives have recognized, barriers to entry in the 
relevant markets are extraordinarily high.
    63. In addition to the difficulty of entry, the proposed 
acquisition is unlikely to generate verifiable, merger-specific 
efficiencies that would offset the proposed acquisition's likely 
anticompetitive effects in the relevant markets.

VII. VIOLATIONS ALLEGED

    64. Bayer's proposed acquisition of Monsanto is likely to 
substantially lessen competition in the relevant markets in violation 
of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.
    65. Unless enjoined, the proposed acquisition would likely have the 
following anticompetitive effects in the relevant markets:
    (a) eliminate present and future competition between Bayer and 
Monsanto;
    (b) lessen innovation;
    (c) raise prices for farmers and other purchasers; and
    (d) reduce quality, service, and choice for farmers and other 
purchasers.

VIII. REQUEST FOR RELIEF

    66. The United States requests that this Court do the following:
    (a) adjudge Bayer's proposed acquisition of Monsanto to violate 
Section 7 of the Clayton Act, 15 U.S.C. Sec.  18;
    (b) permanently enjoin Bayer and Monsanto from consummating their 
proposed acquisition or from entering into or carrying out any other 
agreement, understanding, or plan by which control of the assets or 
businesses of Bayer and Monsanto would be combined;
    (c) award the United States its costs of this action; and
    (d) award the United States other relief that the Court deems just 
and proper.

Dated: _______

Respectfully submitted,

FOR PLAINTIFF UNITED STATES OF AMERICA:

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Makan Delrahim,
Assistant Attorney General for Antitrust.

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Bernard A. Nigro, Jr. (D.C. Bar #412357),
Deputy Assistant Attorney General.

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Donald G. Kempf, Jr.,
Deputy Assistant Attorney General.

-----------------------------------------------------------------------
Patricia A. Brink,
Director of Civil Enforcement.

-----------------------------------------------------------------------
Kathleen S. O'Neill,
Chief, Transportation, Energy & Agriculture Section.

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Caroline E. Laise,
Assistant Chief, Transportation, Energy & Agriculture Section.

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Scott I. Fitzgerald,

Benjamin H. Able,
Don Amlin (D.C. Bar #978349),
Meagan K. Bellshaw,
Cory Brader Leuchten,
Michele B. Cano,
Barbara W. Cash,
Katherine A. Celeste,
Aaron Comenetz (D.C. Bar #479572),
Erin L. Craig,
Emma Dick,
J. Richard Doidge,
Julie Elmer (D.C. Bar #1520972),
Jeremy Evans (D.C. Bar #478097),
Andrew J. Ewalt (D.C. Bar #493433),
Tracy Fisher,
Rachel A. Flipse,
Leah Graham (D.C. Bar #989727),
Brian Hanna,
John A. Holler,
Rachelle R. Ketchum,
Amanda Klovers,
Patrick Kuhlmann,
Robert A. Lepore,
Michelle Livingston (D.C. Bar #461268),
Njeri Mugure,
Michael Nash,
John R. O'Gorman,
Scott Reiter,
James A. Ryan,
Julia A. Schiller (D.C. Bar #986369),
Adam T. Severt,
Patricia L. Sindel (D.C. Bar #997505),
Chinita M. Sinkler,
Mark Tobey,
Scott A. Westrich,
Christopher M. Wilson,
Catharine Wright.

Attorneys for the United States.

U.S. Department of Justice Antitrust Division 450 5th Street, NW, 
Suite 8000 Washington, DC 20530 Tel.: (202) 353-3863 Fax: (202) 616-
2441 E-mail: [email protected].

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    United States of America, Plaintiff, v. Bayer AG, Monsanto 
Company, and BASF SE, Defendants.

Civil Action No.: 1:18-cv-1241
Judge James E. Boasberg

PROPOSED FINAL JUDGMENT

    WHEREAS, Plaintiff United States of America filed its Complaint 
against Bayer AG (``Bayer'') and Monsanto Company (``Monsanto'') on May 
29, 2018;
    AND WHEREAS, pursuant to a Stipulation and Order among Bayer, 
Monsanto, and BASF SE (``BASF'') (collectively, ``Defendants'') and 
Plaintiff, the Court has joined BASF as a defendant to this action for 
the purposes of settlement and for the entry of this Final Judgment;
    AND WHEREAS, Plaintiff and Defendants, by their respective

[[Page 27658]]

attorneys, have consented to the entry of this Final Judgment without 
trial or adjudication of any issue of fact or law, and without this 
Final Judgment constituting any evidence against or admission by any 
party regarding any issue of fact or law;
    AND WHEREAS, Defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by this Court;
    AND WHEREAS, the essence of this Final Judgment is the prompt and 
certain divestiture of certain businesses, rights, and assets by Bayer 
and Monsanto to assure that competition is not substantially lessened;
    AND WHEREAS, Plaintiff requires Bayer and Monsanto to make certain 
divestitures to BASF for the purpose of remedying the loss of 
competition alleged in the Complaint;
    AND WHEREAS, Bayer and Monsanto have represented to Plaintiff that 
all of the divestitures required below can and will be made as required 
by this Final Judgment, BASF has represented to Plaintiff that it can 
and will acquire the Divestiture Assets pursuant to its obligations 
under this Final Judgment, and Defendants have represented to Plaintiff 
that they will later raise no claim of hardship or difficulty as 
grounds for failing to comply with their obligations under this Final 
Judgment or for asking this Court to modify any of the provisions 
contained below;
    NOW THEREFORE, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ORDERED, ADJUDGED, AND DECREED:

I. JURISDICTION

    This Court has jurisdiction over the subject matter of and each of 
the parties hereto with respect to this action. The Complaint states a 
claim upon which relief may be granted against Bayer and Monsanto under 
Section 7 of the Clayton Act, as amended (15 U.S.C. Sec.  18). Pursuant 
to the Stipulation and Order filed simultaneously with this Final 
Judgment joining BASF as a defendant to this action, BASF has consented 
to this Court's exercise of specific personal jurisdiction over BASF in 
this matter solely for the purposes of settlement and for the entry and 
enforcement of the Final Judgment.

II. DEFINITIONS

    As used in this Final Judgment:
    A. ``Bayer'' means Defendant Bayer AG, a German corporation with 
its headquarters in Leverkusen, Germany, its successors and assigns, 
and its subsidiaries, divisions, groups, affiliates, partnerships and 
joint ventures, and their directors, officers, managers, agents, and 
employees.
    B. ``Monsanto'' means Defendant Monsanto Company, a Delaware 
corporation with its headquarters in St. Louis, Missouri, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships and joint ventures, and their directors, 
officers, managers, agents, and employees.
    C. ``BASF'' means Defendant BASF SE, a Societas Europaea with its 
headquarters in Ludwigshafen, Germany, its successors and assigns, and 
its subsidiaries, divisions, groups, affiliates, partnerships and joint 
ventures, and their directors, officers, managers, agents, and 
employees.
    D. ``'839 Business'' means Bayer's global business of researching, 
developing, and manufacturing the BCS-CT12839 pipeline product.
    E. ``Balance Herbicide Business'' means Bayer's global business of 
researching, developing, manufacturing, and selling isoxaflutole-based 
herbicides for use on crops that are isoxaflutole-tolerant as a result 
of genetic modification.
    F. ``Balance Herbicide Divestiture Assets'' means the following 
assets related to the Balance Herbicide Business:
    (1) all tangible assets used primarily by or critical to the 
operation of the Balance Herbicide Business, including, but not limited 
to, all transferable licenses, permits, product registrations, 
regulatory submissions, and authorizations issued by or submitted to 
any governmental organization; all contracts, agreements, leases, 
commitments, certifications, and understandings, including supply 
agreements; and all customer lists, accounts, credit records, and 
transferable customer contracts;
    (2) all patents used by the Balance Herbicide Business;
    (3) a worldwide, exclusive, royalty-free, paid-up, irrevocable, 
perpetual license to Bayer's BALANCE trademark for marketing and 
selling isoxaflutole-based herbicides for use on crops that are 
isoxaflutole-tolerant as a result of genetic modification;
    (4) a worldwide, non-exclusive, royalty-free, paid-up, irrevocable, 
perpetual license (sub-licensable to any tollers designated by BASF) to 
any intellectual property, registration data, technology, know-how, or 
other rights used in the manufacture or formulation of isoxaflutole-
based herbicides for use on crops that are isoxaflutole-tolerant as a 
result of genetic modification; and
    (5) all other intangible assets owned, licensed, controlled, or 
used primarily by or critical to the operation of the Balance Herbicide 
Business, including, but not limited to, all data concerning historical 
and current research and development efforts, including, but not 
limited to, designs of experiments and the results of successful and 
unsuccessful designs and experiments.
    G. ``Broad Acre Seeds and Traits Business'' means Bayer's global 
business of researching, developing, manufacturing, and selling broad 
acre seeds and traits, including, but not limited to, the global cotton 
seed business; the global canola seed business; the global soybean seed 
business; the global LibertyLink trait business for all crops except 
rice; the global research and development programs for wheat and 
``canola quality'' Brassica juncea; and the global trait research and 
development activities. The Broad Acre Seeds and Traits Business 
excludes those assets that relate solely to the following: hybrid rice 
sold in Asia, hybrid cotton sold in India, traditional juncea (mustard) 
and millet sold in India, cotton sold in South Africa, the research and 
development program for sugarcane in Brazil, the research and 
development program for sugarbeets in Europe, and the LibertyLink event 
in rice.
    H. ``Broad Acre Seeds and Traits Divestiture Assets'' means the 
following assets related to the Broad Acre Seeds and Traits Business:
    (1) all tangible assets that comprise the Broad Acre Seeds and 
Traits Business, including, but not limited to, research and 
development activities; all manufacturing plants and equipment, tooling 
and fixed assets, personal property, inventory, office furniture, 
materials, supplies, and other tangible property; all transferable 
licenses, permits, product registrations and regulatory submissions 
(including supporting data), certifications, and authorizations issued 
by or submitted to any governmental organization; all contracts, 
teaming arrangements, agreements, leases, commitments, certifications, 
and understandings, including supply agreements; all customer lists, 
accounts, credit records, and transferable customer contracts; all 
other business and administrative records; all seed production 
facilities; all breeding stations; all research and development 
facilities; all germplasm; and all breeding data, including, but not 
limited to, phenotype, genotype, molecular markers, and performance 
data;
    (2) all intangible assets owned, licensed, controlled, or used by 
the Broad Acre Seeds and Traits Business, including, but not limited 
to, all patents,

[[Page 27659]]

plant variety certificates, licenses and sublicenses, intellectual 
property, copyrights, trademarks, trade names, service marks, service 
names, technical information, computer software and related 
documentation, know-how, trade secrets, drawings, blueprints, designs, 
design protocols, specifications for materials, specifications for 
parts and devices, safety procedures for the handling of materials and 
substances, quality assurance and control procedures, design tools and 
simulation capability, manuals and technical information provided by 
Bayer to its own employees, customers, suppliers, agents, or licensees; 
and research data concerning historical and current research and 
development efforts, including, but not limited to, designs of 
experiments and the results of successful and unsuccessful designs and 
experiments; and
    (3) the copy of Bayer's microbial strain collection (``MSC'') 
stored in Morrisville, North Carolina, including, but not limited to, 
all biological materials comprising the MSC and all documents, data, 
information, reference materials, and trade secrets related to the MSC, 
and (a) a worldwide, exclusive, royalty-free, paid-up, irrevocable, 
perpetual license to use the MSC for trait research in any crop and (b) 
a worldwide, non-exclusive, royalty-free, paid-up, irrevocable, 
perpetual license to use the MSC for any other agricultural use.
    Notwithstanding Paragraphs II(H)(1) through II(H)(3) above, the 
Broad Acre Seeds and Traits Divestiture Assets do not include the 
facilities identified in Appendix A, Paragraphs 1 and 2, or trademarks, 
trade names, service marks, or service names containing the name 
``Bayer.''
    I. ``Clothianidin Seed Treatment Business'' means Bayer's global 
business of researching, developing, manufacturing, and selling seed 
treatments containing clothianidin, Bacillus firmus strain I-1582, or 
Bacillus thuringiensis strain EX 297512. The Clothianidin Seed 
Treatment Business excludes Bayer's business of manufacturing and 
selling seed treatment mixture products containing clothianidin for 
canola/oilseed rape, potatoes, sugarbeets, cereals, or vegetables that 
have been commercialized by Bayer as of the date of filing of the 
Complaint in this matter (except Poncho/VOTiVO, Poncho Plus, and Poncho 
Super). For the avoidance of doubt, these exclusions do not prevent 
BASF from researching, developing, manufacturing, and selling seed 
treatments containing clothianidin for canola/oilseed rape, potatoes, 
sugarbeets, cereals, or vegetables.
    J. ``Collaboration'' means an agreement among non-affiliated firms 
involving some sharing of resources, management, or risk, including, 
but not limited to, joint ventures or research alliances. For the 
avoidance of doubt, Collaboration for the purpose of this Final 
Judgment does not include (1) stand-alone intellectual property 
licenses, including patent, trademark, software, know-how, variety, 
germplasm, and registration data license agreements; (2) stand-alone 
crop protection supply or tolling agreements; (3) cooperation 
agreements related to advocacy and public policy issues; (4) agreements 
related to participation in industry groups and organizations; and (5) 
material transfer agreements.
    K. ``Digital Agriculture Business'' means Bayer's global business 
of researching, developing, manufacturing, and selling digital 
agriculture products.
    L. ``Digital Agriculture Divestiture Assets'' means the following 
assets related to the Digital Agriculture Business:
    (1) all tangible assets that comprise the Digital Agriculture 
Business, including, but not limited to, research and development 
activities; all manufacturing plants and equipment, tooling and fixed 
assets, personal property, inventory, office furniture, materials, 
supplies, and other tangible property; all contracts, teaming 
arrangements, agreements, leases, commitments, certifications, and 
understandings, including supply agreements; all customer lists, 
accounts, credit records, and transferable customer contracts; all 
other business and administrative records; all research and development 
facilities; and
    (2) all intangible assets owned, licensed, controlled, or used by 
the Digital Agriculture Business, including, but not limited to, all 
patents, licenses and sublicenses, intellectual property, copyrights, 
trademarks, trade names, service marks, service names, technical 
information, computer software and related documentation, know-how, 
trade secrets, drawings, blueprints, designs, design protocols, 
specifications for materials, specifications for parts and devices, 
safety procedures for the handling of materials and substances, quality 
assurance and control procedures, design tools and simulation 
capability, manuals and technical information provided by Bayer to its 
own employees, customers, suppliers, agents, or licensees; and research 
data concerning historical and current research and development efforts 
related to the Digital Agriculture Business, including, but not limited 
to, designs of experiments and the results of successful and 
unsuccessful designs and experiments.
    Notwithstanding Paragraphs II(L)(1) and II(L)(2) above, the Digital 
Agriculture Divestiture Assets do not include trademarks, trade names, 
service marks, or service names containing the name ``Bayer.''
    M. ``Divestiture Assets'' means:
    (1) the Balance Herbicide Divestiture Assets;
    (2) the Broad Acre Seeds and Traits Divestiture Assets;
    (3) the Digital Agriculture Divestiture Assets;
    (4) the Glufosinate Ammonium Divestiture Assets;
    (5) the Midwest Soybean Germplasm Divestiture Assets;
    (6) the Pipeline Herbicide Divestiture Assets;
    (7) the Seed Treatment Divestiture Assets; and
    (8) the Vegetable Seed Divestiture Assets.
    N. ``Divestiture Businesses'' means the Balance Herbicide Business, 
the Broad Acre Seeds and Traits Business, the Digital Agriculture 
Business, the Glufosinate Ammonium Business, the Pipeline Herbicide 
Business, the Seed Treatment Business, and the Vegetable Seed Business.
    O. ``Divestiture Closing Date'' means (1) with respect to assets, 
employees, and agreements related to all Divestiture Assets except the 
Vegetable Seed Divestiture Assets, the date on which Bayer divests 
those Divestiture Assets to BASF, and (2) with respect to assets, 
employees, and agreements related to the Vegetable Seed Divestiture 
Assets, the date on which Bayer divests the Vegetable Seed Divestiture 
Assets to BASF.
    P. ``Fluopyram Seed Treatment Business'' means Bayer's global 
business of researching, developing, manufacturing, and selling seed 
treatments containing fluopyram. The Fluopyram Seed Treatment Business 
excludes Bayer's business of researching, developing, manufacturing, 
and selling cereals seed treatments containing fluopyram, claiming only 
fungicidal properties, and claiming no nematode control effect. For the 
avoidance of doubt, this exclusion does not prevent BASF from 
researching, developing, manufacturing, and selling seed treatments for 
cereals containing fluopyram.
    Q. ``Glufosinate Ammonium Business'' means Bayer's global business 
of researching, developing, manufacturing, and selling glufosinate 
ammonium herbicide products.

[[Page 27660]]

    R. ``Glufosinate Ammonium Divestiture Assets'' means the following 
assets related to the Glufosinate Ammonium Business:
    (1) Bayer's glufosinate ammonium manufacturing facilities located 
in Hurth/Knapsack, Germany; Muskegon, Michigan; Mobile, Alabama; and 
Frankfurt, Germany; Bayer's glufosinate formulation facilities located 
in Regina, Canada and Muskegon, Michigan; and these facilities' 
associated manufacturing equipment, tooling and fixed assets, personal 
property, inventory, office furniture, materials, supplies, and other 
tangible property;
    (2) all other tangible assets used primarily by or critical to the 
operation of the Glufosinate Ammonium Business, including all 
contracts, teaming arrangements, agreements, leases, commitments, 
certifications, and understandings, including supply agreements; all 
transferable licenses, permits, and authorizations issued by or 
submitted to any governmental organization; all customer lists, 
accounts, credit records, and transferable customer contracts; and all 
other business and administrative records;
    (3) all patents used in the Glufosinate Ammonium Business, except 
for (a) patents related to the mixture or combined or sequential use of 
glufosinate ammonium with other active ingredients (``Glufosinate 
Mixture and Use Patents'') and (b) patents related to the use of 
glufosinate ammonium, alone or in mixtures, on plants containing 
genetically modified events developed or to be developed by Bayer or 
Monsanto (``Glufosinate Over-The-Top Patents'');
    (4) a worldwide, exclusive, royalty-free, paid-up, irrevocable, 
perpetual license for all Glufosinate Mixture and Use Patents owned, 
controlled, licensed, or used by Bayer or Monsanto with one or more 
claims covering a BASF proprietary active ingredient;
    (5) a worldwide, non-exclusive, irrevocable, perpetual covenant not 
to assert against BASF or its direct or indirect customers all other 
Glufosinate Mixture and Use Patents owned, controlled, licensed, or 
used by Bayer or Monsanto with one or more claims covering any other 
active ingredient, except for any active ingredient itself covered by a 
Bayer or Monsanto patent, during the life of that patent;
    (6) a worldwide, non-exclusive, irrevocable, perpetual covenant not 
to assert against BASF or its direct or indirect customers all current 
or future Glufosinate Over-The-Top Patents owned, controlled, licensed, 
or used by Bayer or Monsanto;
    (7) all other intangible assets owned, licensed, controlled, or 
used primarily by or critical to the operation of the Glufosinate 
Ammonium Business, including, but not limited to, all licenses and 
sublicenses, intellectual property, copyrights, trademarks, trade 
names, service marks, service names, technical information, computer 
software and related documentation, know-how, trade secrets, drawings, 
blueprints, designs, design protocols, specifications for materials, 
specifications for parts and devices, safety procedures for the 
handling of materials and substances, quality assurance and control 
procedures, design tools and simulation capability, manuals and 
technical information provided by Bayer to its own employees, 
customers, suppliers, agents, or licensees; and research data 
concerning historical and current research and development efforts, 
including, but not limited to, designs of experiments and the results 
of successful and unsuccessful designs and experiments; and
    (8) a worldwide, non-exclusive, royalty-free, paid-up, irrevocable, 
perpetual license to all other intellectual property (owned by Bayer or 
that Bayer has the right to license) that is used by the Glufosinate 
Ammonium Business and not addressed earlier in Paragraph II.R, 
including, but not limited to, all copyrights, trademarks, trade names, 
service marks, service names, and trade secrets. Such license shall 
grant BASF the right to make, have made, use, sell or offer for sale, 
copy, create derivative works of, modify, improve, display, perform, 
and enhance the licensed intangible assets. Any improvements or 
modifications to these intangible assets developed by BASF shall be 
owned solely by BASF.
    Notwithstanding Paragraphs II(R)(1) through II(R)(8) above, the 
Glufosinate Ammonium Divestiture Assets do not include the thirty (30) 
general office facilities identified in Appendix A, Paragraph 1; the 
fourteen (14) formulation and filling sites identified in Appendix A, 
Paragraph 3; or trademarks, trade names, service marks, or service 
names containing the name ``Bayer.''
    S. ``Midwest Soybean Germplasm Divestiture Assets'' means the 
following Monsanto assets:
    (1) the four hundred and nineteen (419) soybean populations 
identified in Appendix B;
    (2) a worldwide, non-exclusive, royalty-free, paid-up, irrevocable, 
perpetual license for breeding purposes (subject to the limitations in 
Paragraph II(S)(4)) to twenty (20) soybean varieties developed by 
Monsanto that BASF subsequently will choose pursuant to the following 
process: Bayer will expeditiously provide BASF with access (including 
to all supporting data) to all of the Monsanto Corn States lines (for 
which Monsanto has the ability to offer breeding rights) developed by 
Monsanto for each of the years 2019 and 2020. BASF may choose two 
varieties for each of maturity zones zero through four, resulting in a 
license for twenty (20) lines over the two (2) years;
    (3) all data (including, but not limited to, phenotype, genotype, 
molecular markers, and performance data) related to the transferred 
populations or licensed breeding varieties in Paragraph II(S)(1) above 
for the purpose of developing commercial soybean varieties; and a copy 
of all data (including, but not limited to, phenotype, genotype, 
molecular markers, and performance data) related to the transferred 
populations or licensed breeding varieties in Paragraph II(S)(2) above 
for the purpose of developing commercial soybean varieties; and
    (4) all rights to develop commercial soybean varieties using the 
transferred populations or licensed breeding varieties in Paragraphs 
II(S)(1) and II(S)(2) above, which rights shall not be limited other 
than requiring compliance with trait license agreements for any 
Monsanto traits remaining in any developed line.
    T. ``Pipeline Herbicide Business'' means Bayer's global business of 
researching, developing, and manufacturing ketoenole and N,O-Chelator 
(``NOC'') herbicides for non-selective uses.
    U. ``Pipeline Herbicide Divestiture Assets'' means the following 
assets related to the Pipeline Herbicide Business:
    (1) a worldwide, exclusive, royalty-free, paid-up, irrevocable, 
perpetual license in the field of non-selective uses for all Bayer 
intellectual property rights and know-how related to Bayer's ketoenole 
and to Bayer's NOC herbicide candidates;
    (2) a worldwide, non-exclusive, royalty-free, paid-up, irrevocable, 
perpetual license (sub-licensable to any tollers designated by BASF) to 
any intellectual property, registration data, technology, know-how, or 
other rights used in the manufacture or formulation of ketoenole and of 
NOC herbicides for non-selective uses;
    (3) all data, documents, and know-how from in vitro assays related 
to the use of Bayer's ketoenole and Bayer's NOC herbicide candidates 
with Bayer's relevant herbicide-tolerance traits;

[[Page 27661]]

    (4) all field trials conducted on Bayer's ketoenole and Bayer's NOC 
herbicide candidates for non-selective uses;
    (5) samples of all ketoenole and all NOC herbicide molecules; and
    (6) all data and information on the molecular structure and other 
characteristics of Bayer's ketoenole and Bayer's NOC herbicide 
candidates.
    V. ``Relevant Personnel'' means all Bayer employees who have 
supported or whose job related to the Divestiture Businesses at any 
time between January 1, 2015 and the Divestiture Closing Date.
    W. ``Seed Treatment Business'' means the Clothianidin Seed 
Treatment Business, the Fluopyram Seed Treatment Business, and the '839 
Business.
    X. ``Seed Treatment Divestiture Assets'' means the following assets 
related to the Seed Treatment Business:
    (1) Bayer's Seed Growth Center located in Research Triangle Park, 
North Carolina, including all equipment, tooling and fixed assets, 
personal property, inventory, office furniture, materials, supplies, 
and other tangible property at this facility;
    (2) all other tangible assets used primarily by or critical to the 
operation of the Seed Treatment Business, including, but not limited 
to, all transferable licenses, permits, certifications, product 
registrations, regulatory submissions, and authorizations issued by or 
submitted to any governmental organization; all contracts, teaming 
arrangements, agreements, commitments, certifications, and 
understandings, including supply agreements; all customer lists, 
accounts, credit records, and transferable customer contracts; all 
sales and marketing assets, including, but not limited to, distribution 
plans and any market research conducted; all other business and 
administrative records; samples of all molecules; all information on 
the molecular structure and other characteristics of the products; and 
all internal and available external studies;
    (3) all patents used in Bayer's current and pipeline Poncho, Poncho 
Plus, Poncho Super, Poncho/VOTiVO, Poncho/VOTiVO 2.0, VOTiVO, VOTiVO 
2.0, and TWO.0 seed treatments;
    (4) a worldwide, exclusive, royalty-free, paid-up, irrevocable, 
perpetual license to any other patent with one or more claims covering 
the combination of clothianidin, Bacillus firmus strain I-1582, or 
Bacillus thuringiensis strain EX 297512 with another active ingredient, 
for BASF to combine clothianidin, Bacillus firmus strain I-1582, or 
Bacillus thuringiensis strain EX 297512 with any such other active 
ingredient(s) for seed treatment uses; provided, however, that this 
license does not include any right to make, sell, use, or otherwise 
commercialize any active ingredient itself covered by a Bayer or 
Monsanto patent, during the life of that patent;
    (5) a worldwide, exclusive, royalty-free, paid-up, irrevocable, 
perpetual license for seed treatment uses to all patents used in 
Bayer's current and pipeline ILeVO and COPeO seed treatments; provided, 
however, that this license will be non-exclusive for cereals seed 
treatments containing fluopyram, claiming only fungicidal properties, 
and claiming no nematode control effect;
    (6) a worldwide, exclusive, royalty-free, paid-up, irrevocable, 
perpetual license to any other patent with one or more claims covering 
the combination of fluopyram with another active ingredient, for BASF 
to combine fluopyram with any such other active ingredient(s) for seed 
treatment uses; provided, however, that (a) this license will be non-
exclusive for cereals seed treatments containing fluopyram, claiming 
only fungicidal properties, and claiming no nematode control effect; 
and (b) this license does not include any right to make, sell, use, or 
otherwise commercialize any active ingredient itself covered by a Bayer 
or Monsanto patent, during the life of that patent;
    (7) all patents used exclusively in the '839 Business, and a 
worldwide, exclusive, royalty-free, paid-up, irrevocable, perpetual 
license to all other patents with one or more claims used in the '839 
Business;
    (8) a worldwide, non-exclusive, irrevocable, perpetual covenant not 
to assert against BASF and its direct or indirect customers all other 
patents owned, controlled, licensed, or used by Bayer or Monsanto with 
claims covering the mixture or combined or sequential use of 
clothianidin, Bacillus firmus strain I-1582, Bacillus thuringiensis 
strain EX 297512, fluopyram, or BCS-CT12839 with any active ingredient 
or combination of active ingredients, except for any active ingredient 
itself covered by a Bayer or Monsanto patent, during the life of that 
patent;
    (9) a worldwide, non-exclusive, royalty-free, paid-up, irrevocable, 
perpetual license (sub-licensable to any tollers designated by BASF) to 
any other intellectual property, registration data, technology, know-
how, or other rights used in the manufacture or formulation of any 
current or pipeline product divested as part of the Seed Treatment 
Business; and
    (10) all other intangible assets owned, licensed, controlled, or 
used by the Seed Treatment Business, including, but not limited to, all 
licenses and sublicenses, intellectual property, copyrights, 
trademarks, trade names, service marks, service names, technical 
information, know-how, trade secrets, drawings, designs, design 
protocols, specifications for materials, safety procedures for the 
handling of materials and substances, quality assurance and control 
procedures, design tools and simulation capability, manuals and 
technical information provided by Bayer to its own employees, 
customers, suppliers, agents, or licensees, and data concerning 
historical and current research and development efforts, including, but 
not limited to, designs of experiments and the results of successful 
and unsuccessful designs and experiments.
    Notwithstanding Paragraphs II(X)(1) through II(X)(10) above, the 
Seed Treatment Divestiture Assets do not include (a) active ingredient 
production facilities in Dormagen, Germany; Bergkamen, Germany; or 
Tlaxcala, Mexico; (b) formulation, filling, or packaging sites in 
Amatitlan, Guatemala; Belford Roxo, Brazil; Frankfurt, Germany; Kansas 
City, Missouri; Pinkenba, Australia; or Zarate, Argentina; or (c) 
trademarks, trade names, service marks, or service names containing the 
name ``Bayer.''
    Y. ``Shared Confidential Information'' means confidential business 
information relayed from Bayer to BASF, or vice versa, as a result of 
any agreements entered into pursuant to Paragraph IV(G) or Paragraph 
IV(H) of this Final Judgment, including quantities, units, and prices 
of items ordered or purchased, and any other competitively sensitive 
information regarding Bayer's or BASF's performance under these 
agreements.
    Z. ``Vegetable Seed Business'' means Bayer's global business of 
researching, developing, manufacturing, and selling vegetable seeds.
    AA. ``Vegetable Seed Divestiture Assets'' means the following 
assets related to the Vegetable Seed Business:
    (1) all tangible assets that comprise the Vegetable Seed Business 
including, but not limited to, research and development activities; all 
manufacturing plants and equipment, tooling and fixed assets, personal 
property, inventory, office furniture, materials, supplies, and other 
tangible property; all transferable licenses, permits, product 
registrations and regulatory submissions (including supporting data), 
certifications, and authorizations issued by or submitted to

[[Page 27662]]

any governmental organization; all contracts, teaming arrangements, 
agreements, leases, commitments, certifications, and understandings, 
including supply agreements; all customer lists, accounts, credit 
records, and transferable customer contracts; all other business and 
administrative records; seed production facilities; breeding stations; 
all research and development facilities; all germplasm; and all 
breeding data, including, but not limited to, phenotype, genotype, 
molecular markers, and performance data; and
    (2) all intangible assets owned, licensed, controlled, or used by 
the Vegetable Seed Business, including, but not limited to, all 
patents, plant variety certificates, licenses and sublicenses, 
intellectual property, copyrights, trademarks, trade names, service 
marks, service names, technical information, computer software and 
related documentation, know-how, trade secrets, drawings, blueprints, 
designs, design protocols, specifications for materials, specifications 
for parts and devices, safety procedures for the handling of materials 
and substances, quality assurance and control procedures, design tools 
and simulation capability, manuals and technical information provided 
by Bayer to its own employees, customers, suppliers, agents, or 
licensees; and research data concerning historical and current research 
and development efforts, including, but not limited to, designs of 
experiments and the results of successful and unsuccessful designs and 
experiments.
    Notwithstanding Paragraphs II(AA)(1) and II(AA)(2) above, the 
Vegetable Seed Divestiture Assets do not include the thirty-four (34) 
office facilities identified in Appendix A, Paragraph 4, or trademarks, 
trade names, service marks, or service names containing the name 
``Bayer.''
    BB. ``Yield and Stress Collaboration'' means any agreement between 
Monsanto and BASF existing as of the date of filing of the Complaint in 
this matter related to a collaboration to develop yield and stress 
traits for row crops.

III. APPLICABILITY

    This Final Judgment applies to Defendants and all other persons in 
active concert or participation with any of them who receive actual 
notice of this Final Judgment by personal service or otherwise.

IV. DIVESTITURES

    A. By the later of ninety (90) calendar days after the filing of 
the Complaint in this matter or ninety (90) calendar days after 
receiving all international antitrust approvals required for the 
transfer of the Divestiture Assets, Bayer and Monsanto are ordered and 
directed to divest the Divestiture Assets to BASF in a manner 
consistent with this Final Judgment. The United States, in its sole 
discretion, may agree to one or more extensions of this period not to 
exceed sixty (60) calendar days in total and shall notify this Court in 
such circumstances. Defendants agree to use their best efforts to 
divest the Divestiture Assets as expeditiously as possible.
    B. Bayer shall permit BASF to have reasonable access to personnel 
and to make inspections of the facilities to be acquired by BASF; 
access to any and all environmental, zoning, and other permit documents 
and information; and access to any and all financial, operational, or 
other documents and information customarily provided as part of a due 
diligence process.
    C. Bayer and Monsanto shall not take any action that will impede in 
any way the permitting, operation, or divestiture of the Divestiture 
Assets.
    D. Unless the United States otherwise consents in writing, the 
divestitures pursuant to Section IV of this Final Judgment shall 
include the entire Divestiture Assets and shall be accomplished in such 
a way as to satisfy the United States, in its sole discretion, that the 
Divestiture Assets can and will be used by BASF as part of the viable, 
ongoing operation of the Divestiture Businesses. The divestitures shall 
be accomplished so as to satisfy the United States, in its sole 
discretion, that none of the terms of any agreement between BASF and 
Bayer and Monsanto give Bayer and Monsanto the ability unreasonably to 
raise BASF's costs, to lower BASF's efficiency, or otherwise to 
interfere in the ability of BASF to compete effectively.
    E. Employees
    (1) Within ten (10) business days following the filing of the 
Complaint in this matter, Bayer shall provide to BASF, the United 
States, and the Monitoring Trustee, organization charts covering every 
person providing any support for the Divestiture Businesses for each 
year since January 1, 2015. Within ten (10) business days of receiving 
a request from BASF, Bayer shall provide to BASF, the United States, 
and the Monitoring Trustee, additional information related to 
identified Relevant Personnel, including name, job title, reporting 
relationships, Hay points, past experience, responsibilities from 
January 1, 2015 through the Divestiture Closing Date, training and 
educational history, relevant certifications, job performance 
evaluations, and current salary and benefits information to enable BASF 
to make offers of employment. If Bayer is barred by any applicable laws 
from providing any of this information to BASF, within ten (10) 
business days of receiving BASF's request, Bayer shall provide the 
requested information to the greatest extent possible under applicable 
laws and also provide a written explanation of its inability to comply 
fully with BASF's request for information regarding Relevant Personnel.
    (2) Upon request, Bayer shall make Relevant Personnel available for 
interviews with BASF during normal business hours at a mutually 
agreeable location. Bayer will not interfere with any negotiations by 
BASF to employ any Relevant Personnel. Interference includes but is not 
limited to offering to increase the salary or benefits of Relevant 
Personnel other than as part of a company-wide increase in salary or 
benefits granted in the ordinary course of business.
    (3) For any Relevant Personnel who elect employment with BASF, 
Bayer shall waive all non-compete and non-disclosure agreements (except 
as noted in Paragraph IV(E)(5)), vest all unvested pension and other 
equity rights, and provide all benefits which Relevant Personnel would 
be provided if transferred to a buyer of an ongoing business.
    (4) For a period of two (2) years from the date of filing of the 
Complaint in this matter, Bayer may not solicit to hire, or hire, any 
such person who was hired by BASF, unless (a) such individual is 
terminated or laid off by BASF or (b) BASF agrees in writing that Bayer 
may solicit or hire that individual.
    (5) Nothing in Paragraph IV(E) shall prohibit Bayer from 
maintaining any reasonable restrictions on the disclosure by any 
employee who accepts an offer of employment with BASF of Bayer's 
proprietary non-public information that is (a) not otherwise required 
to be disclosed by this Final Judgment, (b) related solely to Bayer's 
businesses and clients, and (c) unrelated to the Divestiture Assets.
    (6) BASF's right to hire Relevant Personnel pursuant to Section 
IV(E) and Bayer's obligations under Paragraph IV(E)(1), Paragraph 
IV(E)(2), and Paragraph IV(E)(3) shall last for a period of one (1) 
year after the Divestiture Closing Date.
    F. Asset Warranties
    (1) In addition to any other warranties in the divestiture-related 
agreements entered into by Defendants, Bayer and

[[Page 27663]]

Monsanto shall warrant to BASF (a) that each asset will be operational 
as of the Divestiture Closing Date; (b) that, for each of the 
Divestiture Assets, there are no material defects in the environmental, 
zoning, or other permits pertaining to the operation of each asset; (c) 
that following the sale of each of the Divestiture Assets, Bayer will 
not undertake, directly or indirectly, any challenges to the 
environmental, zoning, or other permits related to the operation of 
each of the Divestiture Assets; and (d) the Divestiture Assets are 
sufficient in all material respects for BASF, taking into account 
BASF's assets and business, to maintain the viability and 
competitiveness of the Divestiture Businesses.
    (2) In addition to any other remedial provisions in the 
divestiture-related agreements entered into by Defendants, for a period 
of up to one (1) year following the Divestiture Closing Date, if BASF 
determines that any assets not included in the Divestiture Assets were 
previously used by the Divestiture Businesses and are reasonably 
necessary for the continued competitiveness of the Divestiture 
Businesses, it shall notify the United States, the Monitoring Trustee, 
and Bayer in writing that it requires such assets. The United States, 
in its sole discretion, taking into account BASF's assets and business, 
shall determine whether any of the assets identified should be divested 
to BASF. If the United States determines that such assets should be 
divested, Bayer and BASF will negotiate an agreement within thirty (30) 
calendar days providing for the divestiture of such assets in a period 
to be determined by the United States in consultation with Bayer and 
BASF. The terms of any such divestiture agreement shall be commercially 
reasonable and must be acceptable to the United States, in its sole 
discretion.
    G. Supply and Tolling Agreements
    (1) Seed Treatment Supply Agreements for Broad Acre Seeds and 
Traits Business: At the option of BASF, on or before the Divestiture 
Closing Date, Bayer shall enter into one or more agreements with BASF 
for the supply of the Bayer seed treatments (except the seed treatments 
divested as part of the Clothianidin Seed Treatment Business or 
Fluopyram Seed Treatment Business) used by Bayer in the Broad Acre 
Seeds and Traits Business for an initial period of up to two (2) years. 
Bayer will supply BASF with these seed treatments at variable cost, in 
priority over other purchasers, and in the quantities demanded by BASF 
under any such agreement until the expiration of that agreement. All 
other terms and conditions of any such agreement must be reasonably 
related to market conditions for the supply of seed treatments. Upon 
BASF's request, the United States, in its sole discretion, may approve 
one or more extensions of any such agreement for a total of up to an 
additional two (2) years. The United States, in its sole discretion, 
shall determine whether supply pursuant to any such extension must be 
at variable cost.
    (2) Isoxaflutole Supply Agreement: At the option of BASF, on or 
before the Divestiture Closing Date, Bayer shall enter into one or more 
agreements with BASF for the supply of isoxaflutole to be used on crops 
that are isoxaflutole-tolerant as a result of genetic modification for 
an initial period of two (2) years. Bayer will supply BASF with 
formulated isoxaflutole and the isoxaflutole active ingredient at 
variable cost, in priority over other purchasers, and in the quantities 
demanded by BASF under any such agreement until the expiration of that 
agreement. All other terms and conditions of any such agreement must be 
reasonably related to market conditions for the supply of herbicides 
and the active ingredients in herbicides. Upon BASF's request, the 
United States, in its sole discretion, may approve one or more 
extensions of any such agreement for a total of up to an additional 
four (4) years. The United States, in its sole discretion, shall 
determine whether supply pursuant to any such extension must be at 
variable cost.
    (3) Tolling Agreement for Glufosinate Ammonium: At the option of 
BASF, on or before the Divestiture Closing Date, Bayer shall enter into 
one or more tolling agreements with BASF for the formulation, filling, 
and packaging of glufosinate ammonium products for an initial period of 
up to two (2) years. Bayer will formulate, fill, and package 
glufosinate ammonium products for BASF at variable cost, in priority 
over other purchasers, and in the quantities demanded by BASF under any 
such agreement until the expiration of that agreement. All other terms 
and conditions of any such agreement must be reasonably related to 
market conditions for the formulation, filling, and packaging of 
herbicides. Upon BASF's request, the United States, in its sole 
discretion, may approve one or more extensions of any such agreement 
for a total of up to an additional one (1) year. The United States, in 
its sole discretion, shall determine whether tolling pursuant to any 
such extension must be at variable cost.
    (4) Tolling Agreement for Divested Seed Treatment Formulations: At 
the option of BASF, on or before the Divestiture Closing Date, Bayer 
shall enter into one or more tolling agreements with BASF for the 
formulation, filling, and packaging of the seed treatments divested as 
part of the Clothianidin Seed Treatment Business and the Fluopyram Seed 
Treatment Business for an initial period of up to two (2) years. Bayer 
will toll these products for BASF at variable cost, in priority over 
other purchasers, and in the quantities demanded by BASF under any such 
agreement until the expiration of that agreement. All other terms and 
conditions of any such agreement must be reasonably related to market 
conditions for the formulation, filling, and packaging of seed 
treatments. Upon BASF's request, the United States, in its sole 
discretion, may approve one or more extensions of any such agreement 
for a total of up to an additional two (2) years. The United States, in 
its sole discretion, shall determine whether tolling pursuant to any 
such extension must be at variable cost.
    (5) Clothianidin Active Ingredient Tolling Agreement: At the option 
of BASF, on or before the Divestiture Closing Date, Bayer shall enter 
into one or more tolling agreements with BASF for the supply of the 
active ingredients used in the seed treatments divested as part of the 
Clothianidin Seed Treatment Business for an initial period of up to two 
(2) years. Bayer will toll these active ingredients for BASF at 
variable cost, in priority over other purchasers, and in the quantities 
demanded by BASF under any such agreement until the expiration of that 
agreement. All other terms and conditions of any such agreement must be 
reasonably related to market conditions for the tolling of active 
ingredients used in seed treatments. Upon BASF's request, the United 
States, in its sole discretion, may approve one or more extensions of 
any such agreement for a total of up to an additional four (4) years. 
The United States, in its sole discretion, shall determine whether 
tolling pursuant to any such extension must be at variable cost.
    (6) Fluopyram Active Ingredient Tolling Agreement: At the option of 
BASF, on or before the Divestiture Closing Date, Bayer shall enter into 
a tolling agreement with BASF for the supply of the fluopyram active 
ingredient for an initial period of up to two (2) years. Bayer will 
toll this active ingredient for BASF at variable cost, in priority over 
other purchasers, and in the quantities demanded by BASF under any such 
agreement until the expiration of that agreement. All other

[[Page 27664]]

terms and conditions of any such agreement must be reasonably related 
to market conditions for the tolling of active ingredients used in seed 
treatments. Upon BASF's request, the United States, in its sole 
discretion, may approve one or more extensions of any such agreement 
for a total of up to an additional four (4) years. The United States, 
in its sole discretion, shall determine whether tolling pursuant to any 
such extension must be at variable cost.
    (7) Reverse-Tolling Agreement for Bayer Products: At the option of 
Bayer, on or before the Divestiture Closing Date, BASF shall enter into 
a reverse-tolling agreement with Bayer for the formulation, filling, 
and packaging of the Bayer products manufactured at the Regina, Canada 
formulation facility that is part of the Glufosinate Ammonium 
Divestiture Assets for an initial period of up to two (2) years. All 
terms and conditions of any such agreement must be reasonably related 
to market conditions for the formulation, filling, and packaging of 
these crop protection products. Upon Bayer's request, the United 
States, in its sole discretion, may approve one or more extensions of 
such agreement for a total of up to an additional six (6) months.
    (8) Other Supply and Tolling Agreements: At the option of BASF, on 
or before the Divestiture Closing Date, Bayer and BASF shall enter into 
any other supply, reverse-supply, tolling, or reverse-tolling 
agreements reasonably necessary to allow BASF to operate any 
Divestiture Assets or to facilitate the transfer of Bayer facilities to 
BASF.
    (9) The terms and conditions of all agreements reached between 
Bayer and BASF under Paragraph IV(G) must be acceptable to the United 
States, in its sole discretion. Any amendment or modification of such 
agreements may be entered into only with the approval of the United 
States, in its sole discretion. Bayer shall perform all duties and 
provide all services required of Bayer under the agreements reached 
between Bayer and BASF under Paragraph IV(G).
    (10) BASF will use best efforts to develop or procure alternative 
sources of supply by the end of the initial periods identified in 
Paragraph IV(G) for supply and tolling agreements and will continue to 
use best efforts during any extension period.
    (11) Bayer will use best efforts to develop or procure alternative 
sources of supply by the end of the initial periods identified in 
Paragraph IV(G) for reverse-supply and reverse-tolling agreements and 
will continue to use best efforts during any extension period.
    H. Transition Services
    (1) Transition Services Agreements for Information Technology 
Support: At the option of BASF, on or before the Divestiture Closing 
Date, Bayer shall enter into one or more transition services agreements 
to provide information technology services and support for the 
Divestiture Assets for an initial period of up to one (1) year. Bayer 
will provide the transition services under any such agreement at no 
cost to BASF until the expiration of the agreement. All other terms and 
conditions of any such agreement must be reasonably related to market 
conditions for the provision of the relevant services. Upon BASF's 
request, the United States, in its sole discretion, may approve one or 
more extensions of this agreement for a total of up to an additional 
one (1) year.
    (2) Bayer Warranty of Transition Services Provided by Tata 
Consultancy Services: Bayer has contracted with a third-party vendor, 
Tata Consultancy Services, to create interim, stand-alone information 
and business support systems for some components of the Divestiture 
Assets. Bayer shall warrant to BASF that the systems developed by Tata 
Consultancy Services will be operational on the Divestiture Closing 
Date and support operations of the relevant components of the 
Divestiture Assets in a manner that is substantially consistent with 
prior operations of these businesses. Except for de minimis 
deficiencies, Bayer shall use best efforts to take all necessary 
actions to correct expeditiously any deficiencies inconsistent with 
this warranty and shall be solely responsible for all costs incurred in 
resolving the deficiencies, including by paying Tata Consultancy 
Services's fees.
    (3) Distribution Agreements for Glufosinate Ammonium and Divested 
Seed Treatment Products: At the option of BASF, on or before the 
Divestiture Closing Date, Bayer shall enter into one or more agreements 
to distribute on BASF's behalf products containing glufosinate 
ammonium, clothianidin, Bacillus firmus strain I-1582, or fluopyram 
outside the United States. BASF shall terminate any such agreement 
within one (1) year. Upon BASF's request, the United States, in its 
sole discretion, may approve one or more extensions of the period for 
BASF to terminate any such agreement for a total of up to an additional 
one (1) year.
    (4) Other Transition Services Agreements: At the option of BASF, on 
or before the Divestiture Closing Date, Bayer shall enter into other 
transition services or reverse transition services agreements to 
provide any other transition services reasonably necessary to allow 
BASF to operate any Divestiture Assets or to facilitate the transfer of 
Bayer facilities to BASF. Unless specifically excepted elsewhere in 
this Final Judgment, Bayer will provide transition services under any 
such agreement for an initial period of up to two (2) years and on 
price terms no worse than at variable cost until the expiration of the 
agreement. All other terms and conditions of any such agreement must be 
reasonably related to market conditions for the provision of the 
relevant services. Upon BASF's request, the United States, in its sole 
discretion, may approve one or more extensions of any such agreement 
for a total of up to an additional one (1) year.
    (5) The terms and conditions of all agreements reached between 
Bayer and BASF under Paragraph IV(H) must be acceptable to the United 
States, in its sole discretion. Any amendments or modifications of the 
agreements may be entered into only with the approval of the United 
States, in its sole discretion. Bayer shall perform all duties and 
provide all services required of Bayer under the agreements reached 
between Bayer and BASF under Paragraph IV(H).
    (6) BASF will use best efforts to develop alternative solutions by 
the end of the initial periods identified in Paragraph IV(H) for 
transition services agreements and will continue to use best efforts 
during any extension period.
    (7) Bayer will use best efforts to develop alternative solutions by 
the end of the initial periods identified in Paragraph IV(H) for 
reverse-transition services agreements and will continue to use best 
efforts during any extension period.
    I. Clothianidin Licenses Back: At the option of Bayer, BASF shall 
enter into an agreement to provide Bayer the following licenses:
    (1) a worldwide, exclusive, royalty-free, paid-up license to the 
rights transferred to BASF in Paragraph II(X)(3) for (a) all non-seed 
treatment uses of clothianidin, (b) all uses of active ingredients 
other than clothianidin, Bacillus firmus strain I-1582, or Bacillus 
thuringiensis strain EX 297512, and (c) combinations of active 
ingredients that do not include clothianidin, Bacillus firmus strain I-
1582, or Bacillus thuringiensis strain EX 297512; and
    (2) a worldwide, non-exclusive, royalty-free, paid-up license to 
the rights transferred to BASF in Paragraphs II(X)(3) and II(X)(4) for 
the use of clothianidin in any Bayer seed treatment mixture product for 
canola/oilseed rape, potatoes, sugarbeets, cereals, and vegetables that 
has been commercialized by Bayer as of the date

[[Page 27665]]

of the filing of the Complaint in this matter (except Poncho/VOTiVO, 
Poncho Plus, and Poncho Super).
    J. Digital Agriculture License Back: At the option of Bayer, BASF 
shall enter into an agreement to provide Bayer a non-exclusive, 
royalty-free, paid-up license to the Digital Agriculture Divestiture 
Assets for the limited purpose of allowing Bayer to sell outside North 
America the following digital agriculture products: Expert.com web 
application; Weedscout mobile application; Xarvio FieldManager web 
application; Xarvio FieldManager mobile application; and Xarvio 
Scouting mobile application. This license shall not give Bayer (1) any 
rights to any improvements made by BASF to the Digital Agriculture 
Divestiture Assets or (2) any rights to use any trademarks or brand 
names divested as part of the Digital Agriculture Divestiture Assets, 
including, but not limited to, Expert.com, Weedscout, or Xarvio.
    K. Third-Party Agreements: At BASF's option, on or before the 
Divestiture Closing Date, Bayer shall assign or otherwise transfer to 
BASF all transferable or assignable agreements, or any assignable 
portions thereof, related to the Divestiture Assets, including, but not 
limited to, all customer contracts, licenses, and collaborations. Bayer 
shall use best efforts to expeditiously obtain from any third parties 
any consent necessary to transfer or assign to BASF all agreements 
related to the Divestiture Assets. To the extent consent cannot be 
obtained and the agreement is not otherwise assignable, in addition to 
the existing mitigation rules agreed upon between Bayer and BASF, Bayer 
shall use best efforts to obtain for BASF, as expeditiously as 
possible, the full benefit of any such agreement as it relates to the 
Divestiture Businesses by assisting BASF to secure a new agreement and 
by taking any other steps necessary to ensure that BASF obtains the 
full benefit of the agreement as it relates to the Divestiture 
Businesses. Bayer will not assert, directly or indirectly, any legal 
claim that would interfere with BASF's ability to obtain the full 
benefit from any transferred third-party agreement to the same extent 
enjoyed by Bayer prior to the transfer.
    L. Licenses, Registrations, and Permits
    (1) Where necessary, BASF will apply for licenses, registrations, 
and permits that support the Divestiture Businesses to replace those 
held by Bayer as expeditiously as possible and, in any event, no later 
than six (6) months from the Divestiture Closing Date. The United 
States, in its sole discretion, may approve one or more extensions of 
this period, for a total of up to an additional six (6) months, for 
BASF to satisfy this requirement. BASF will make best efforts to obtain 
such licenses, registrations, and permits as expeditiously as possible.
    (2) Bayer will make best efforts to assist BASF with acquiring new 
licenses, registrations, and permits to support the Divestiture 
Businesses and, until BASF has the necessary licenses, registrations, 
and permits, Bayer will provide BASF with the benefit of Bayer's 
licenses, registrations, and permits in BASF's operation of the 
Divestiture Assets.
    (3) Bayer will globally maintain all product registrations for 
isoxaflutole, fluopyram, and any other retained product registrations 
related to the Divestiture Businesses, and Bayer will make best efforts 
to obtain regulatory approvals for isoxaflutole formulations used on 
isoxaflutole-tolerant cotton and soybeans.
    M. Modification of Monsanto-BASF Yield and Stress Collaboration: 
The Yield and Stress Collaboration will be modified consistent with the 
following: (1) Defendants shall not contribute any more genes to the 
Yield and Stress Collaboration; (2) the Yield and Stress Collaboration 
will continue as before with respect to genes or events in the three 
active research and development projects, except that BASF will receive 
a license with stacking rights to use in its own seeds any Yield and 
Stress Collaboration trait commercialized by Monsanto, on terms 
acceptable to the United States, in its sole discretion; (3) both Bayer 
and BASF shall receive (a) copies of all other genes and related 
research records in the Yield and Stress Collaboration regardless of 
crop, and (b) non-exclusive research, development, breeding, and 
commercialization rights to these genes in any crop with no cost, 
revenue, or profit sharing; and (4) the terms related to DroughtGard 
shall be unchanged.
    N. Monsanto Midwest Soybean Germplasm: At the option of BASF, on or 
before the Divestiture Closing Date, Bayer and Monsanto shall enter 
into one or more agreements facilitating the transfer and licensing of 
the Midwest Soybean Germplasm Divestiture Assets. The terms and 
conditions of any such agreement reached between Bayer and Monsanto and 
BASF must be acceptable to the United States, in its sole discretion. 
Any amendment or modification of any such agreement may be entered into 
only with the approval of the United States, in its sole discretion. 
Bayer and Monsanto shall perform all duties and provide all services 
required of them under any such agreement reached between Bayer and 
BASF.

V. FINANCING

    Neither Bayer nor Monsanto shall finance all or any part of any 
purchase made pursuant to Section IV of this Final Judgment.

VI. HOLD SEPARATE AND ASSET PRESERVATION

    Until all the divestitures required by this Final Judgment have 
been fully accomplished, Defendants shall take all steps necessary to 
comply with the Stipulation and Order entered by this Court. Defendants 
shall take no action that would jeopardize any divestiture ordered by 
this Court.

VII. AFFIDAVITS

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestitures have been accomplished under Section IV, Bayer and 
Monsanto shall deliver to the United States and the Monitoring Trustee 
an affidavit, signed by each of Bayer's and Monsanto's Chief Financial 
Officer and General Counsel, which shall describe the fact and manner 
of Bayer's and Monsanto's compliance with Section IV. Assuming the 
information set forth in the affidavit is true and complete, any 
objection by the United States to information provided by Bayer and 
Monsanto, including limitation on information, shall be made within 
fourteen (14) calendar days of receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, each of the Defendants shall deliver to the United 
States and the Monitoring Trustee an affidavit that describes in 
reasonable detail all actions it has taken and all steps it has 
implemented on an ongoing basis to comply with this Final Judgment and 
the Stipulation and Order. Each of the Defendants shall deliver to the 
United States and the Monitoring Trustee an affidavit describing any 
changes to the efforts and actions outlined in its earlier affidavits 
filed pursuant to this Final Judgment within fifteen (15) calendar days 
after the change is implemented.
    C. In addition to providing affidavits to the United States and the 
Monitoring Trustee as required under Paragraph VII(A) and Paragraph 
VII(B), Defendants shall immediately notify the United States and the 
Monitoring Trustee verbally and in writing of any potential problems or 
delays in meeting any of the obligations set forth in this Final 
Judgment and the Stipulation and Order.

[[Page 27666]]

    D. Bayer and Monsanto shall keep all records of all efforts made to 
preserve and divest each of the Divestiture Assets until one year after 
such divestitures have been completed. BASF shall keep all records of 
all efforts made to acquire each of the Divestiture Assets until one 
year after such divestitures have been completed.

VIII. APPOINTMENT OF MONITORING TRUSTEE

    A. Upon filing of this Final Judgment, the United States may, in 
its sole discretion, appoint a Monitoring Trustee, subject to approval 
by this Court.
    B. The Monitoring Trustee shall have the power and authority to 
monitor Defendants' compliance with the terms of this Final Judgment 
and the Stipulation and Order entered by this Court, and shall have 
such other powers as this Court deems appropriate. The Monitoring 
Trustee shall investigate and report on Defendants' compliance with 
their respective obligations under, and efforts to effectuate the 
purposes of, this Final Judgment and the Stipulation and Order, 
including, but not limited to, reviewing (1) the implementation and 
execution of the compliance plan required by Section IX, and (2) any 
claimed breach by Bayer of any agreement entered into pursuant to 
Paragraph IV(G) or Paragraph IV(H). If the Monitoring Trustee 
determines that any violation of the Final Judgment or the Stipulation 
and Order or breach of any related agreement has occurred, the 
Monitoring Trustee shall recommend an appropriate remedy to the United 
States, which, in its sole discretion, can accept, modify, or reject a 
recommendation to pursue a remedy.
    C. Subject to Paragraph VIII(E), the Monitoring Trustee may hire at 
Bayer's cost and expense any consultants, accountants, attorneys, or 
other agents reasonably necessary in the Monitoring Trustee's judgment 
and who shall be solely accountable to the Monitoring Trustee. Any such 
consultants, accountants, attorneys, or other agents shall serve on 
such terms and conditions as the United States approves, in its sole 
discretion, including confidentiality requirements and conflict of 
interest certifications.
    D. Defendants shall not object to actions taken by the Monitoring 
Trustee in fulfillment of the Monitoring Trustee's responsibilities 
under any order of this Court on any ground other than the Monitoring 
Trustee's malfeasance. Any such objections by Defendants must be 
conveyed in writing to the United States and the Monitoring Trustee 
within ten (10) calendar days after the action taken by the Monitoring 
Trustee giving rise to the Defendants' objection.
    E. The Monitoring Trustee shall serve at Bayer's cost and expense 
pursuant to a written agreement with Bayer and on such terms and 
conditions as the United States approves, in its sole discretion, 
including confidentiality requirements and conflict of interest 
certifications. The compensation of the Monitoring Trustee and any 
consultants, accountants, attorneys, and other agents retained by the 
Monitoring Trustee shall be on reasonable and customary terms 
commensurate with the individuals' experience and responsibilities. If 
the Monitoring Trustee and Bayer are unable to reach agreement on the 
Monitoring Trustee's or any agents' or consultants' compensation or 
other terms and conditions of engagement within fourteen (14) calendar 
days of appointment of the Monitoring Trustee, the United States may, 
in its sole discretion, take appropriate action, including making a 
recommendation to this Court. The Monitoring Trustee shall, within 
three (3) business days of hiring any consultants, accountants, 
attorneys, or other agents, provide written notice of such hiring and 
the rate of compensation to Bayer and the United States.
    F. The Monitoring Trustee shall have no responsibility or 
obligation for the operation of Defendants' businesses.
    G. Defendants shall use their best efforts to assist the Monitoring 
Trustee in monitoring Defendants' compliance with their individual 
obligations under this Final Judgment and the Stipulation and Order. 
The Monitoring Trustee and any consultants, accountants, attorneys, and 
other agents retained by the Monitoring Trustee shall have full and 
complete access to the personnel, books, records, and facilities 
related to compliance with this Final Judgment and the Stipulation and 
Order, subject to reasonable protection for trade secret or other 
confidential research, development, or commercial information or any 
applicable privileges. Defendants shall take no action to interfere 
with or to impede the Monitoring Trustee's accomplishment of its 
responsibilities.
    H. After its appointment, the Monitoring Trustee shall file reports 
monthly until all the Divestiture Assets have been divested and 
thereafter as frequently as the United States determines, in its sole 
discretion, setting forth Defendants' compliance with their obligations 
under this Final Judgment and under the Stipulation and Order. The 
Monitoring Trustee shall file such reports with the United States and, 
as appropriate, this Court. To the extent that any such report contains 
information that the Monitoring Trustee deems confidential, that report 
shall not be filed in the public docket of this Court.
    I. The Monitoring Trustee shall audit Defendants' compliance with 
Section IX every six (6) months. Defendants will provide full access to 
any documents and make employees available for interviews requested by 
the Monitoring Trustee pursuant to performing the semi-annual audit. 
The Monitoring Trustee shall file a report of the audit with the United 
States and, as appropriate, this Court. To the extent that any such 
report contains information that the Monitoring Trustee deems 
confidential, that report shall not be filed in the public docket of 
this Court.
    J. The Monitoring Trustee shall serve until the sale of the 
Divestiture Assets is finalized pursuant to Section IV and the 
expiration of any agreement entered into pursuant to Paragraph IV(G) or 
Paragraph IV(H) or other agreements between Bayer and BASF that may 
affect the accomplishment of the purposes of this Final Judgment, 
unless the United States, in its sole discretion, terminates earlier or 
extends this period.
    K. If the United States determines that the Monitoring Trustee has 
ceased to act or failed to act diligently or in a reasonably cost-
effective manner, it may recommend this Court appoint a substitute 
Monitoring Trustee.

IX. FIREWALL

    A. During the term of any agreement entered into pursuant to 
Paragraph IV(G) or Paragraph IV(H), Bayer and BASF shall implement and 
maintain reasonable procedures to prevent Shared Confidential 
Information from being disclosed by or through implementation and 
execution of these agreements to components or individuals within the 
respective companies involved in the marketing, distribution, or sale 
of competing products.
    B. Bayer and BASF each shall, within twenty (20) business days of 
the entry of the Stipulation and Order, submit to the United States and 
the Monitoring Trustee a document setting forth in detail the 
procedures implemented to effect compliance with Section IX. Upon 
receipt of the document, the United States shall notify Bayer and BASF 
within twenty (20) business days whether, in its sole discretion, it 
approves of or rejects each party's compliance plan. In the event that 
Bayer's or BASF's compliance plan is rejected, the United States shall 
provide

[[Page 27667]]

Bayer or BASF, as applicable, the reasons for the rejection. Bayer or 
BASF, as applicable, shall be given the opportunity to submit, within 
ten (10) business days of receiving a notice of rejection, a revised 
compliance plan. If Bayer or BASF cannot agree with the United States 
on a compliance plan, the United States shall have the right to request 
that this Court rule on whether Bayer's and BASF's proposed compliance 
plan fulfills the requirements of Section IX.
    C. Bayer and BASF shall:
    (1) furnish a copy of this Final Judgment and related Competitive 
Impact Statement within sixty (60) calendar days of entry of the Final 
Judgment to (a) each officer, director, and any other employee that 
will receive Shared Confidential Information; and (b) each officer, 
director, and any other employee that is involved in (i) any contacts 
with the other companies that are parties to any agreement entered into 
pursuant to Paragraph IV(G) or Paragraph IV(H), or (ii) making 
decisions under any agreement entered into pursuant to Paragraph IV(G) 
or Paragraph IV(H);
    (2) furnish a copy of this Final Judgment and related Competitive 
Impact Statement to any successor to a person designated in Paragraph 
IX(C)(1) upon assuming that position;
    (3) annually brief each person designated in Paragraph IX(C)(1) and 
Paragraph IX(C)(2) on the meaning and requirements of this Final 
Judgment and the antitrust laws; and
    (4) obtain from each person designated in Paragraph IX(C)(1) and 
Paragraph IX(C)(2), within thirty (30) calendar days of that person's 
receipt of the Final Judgment, a certification that he or she (a) has 
read and, to the best of his or her ability, understands and agrees to 
abide by the terms of this Final Judgment; (b) is not aware of any 
violation of the Final Judgment that has not been reported to the 
company; and (c) understands that any person's failure to comply with 
this Final Judgment may result in an enforcement action for civil or 
criminal contempt of court against each Defendant or any person who 
violates this Final Judgment.

X. COMPLIANCE INSPECTION

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of any related orders such as any Stipulation and 
Order, or of determining whether the Final Judgment should be modified 
or vacated, and subject to any legally recognized privilege, from time 
to time authorized representatives of the United States Department of 
Justice, including consultants and other persons retained by the United 
States, shall, upon written request of an authorized representative of 
the Assistant Attorney General in charge of the Antitrust Division, and 
on reasonable notice to Defendants, be permitted:
(1) access during Defendants' office hours to inspect and copy, or 
at the option of the United States, to require Defendants to provide 
hard copy or electronic copies of, all books, ledgers, accounts, 
records, data, and documents in the possession, custody, or control 
of Defendants, related to any matters contained in this Final 
Judgment; and
(2) to interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual 
counsel present, regarding such matters. The interviews shall be 
subject to the reasonable convenience of the interviewee and without 
restraint or interference by Defendants.

    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
Defendants shall submit written reports or responses to written 
interrogatories, under oath if requested, related to any of the matters 
contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
Section X shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. If at the time information or documents are furnished by 
Defendants to the United States, Defendants shall represent and 
identify in writing the material in any such information or documents 
to which a claim of protection may be asserted under Rule 26(c)(l)(G) 
of the Federal Rules of Civil Procedure and mark each pertinent page of 
such material, ``Subject to claim of protection under Rule 26(c)(l)(G) 
of the Federal Rules of Civil Procedure,'' then the United States shall 
give Defendants ten (10) calendar days' notice prior to divulging such 
material in any legal proceeding (other than a grand jury proceeding).

XI. NO REACQUISITION OR RECOMBINATION OF DIVESTITURE ASSETS

    Bayer may not reacquire any part of the Divestiture Assets during 
the term of this Final Judgment. Except for an acquisition pursuant to 
Paragraph IV(F)(2), BASF may not acquire from Bayer during the term of 
this Final Judgment any assets or businesses that compete with the 
Divestiture Assets. In addition, Bayer and BASF shall not, without the 
prior written consent of the United States, enter into any new 
Collaboration involving any of the Divestiture Assets or expand the 
scope of any existing Collaboration involving any of the Divestiture 
Assets during the term of this Final Judgment. The United States will 
notify Bayer and BASF of its decision within sixty (60) calendar days 
of receiving written notification from Bayer and BASF of the proposed 
new or expanded Collaboration. The decision whether or not to consent 
to a Collaboration shall be within the sole discretion of the United 
States.

XII. NOTIFICATION OF FUTURE TRANSACTIONS

    A. For transactions that are not subject to the reporting and 
waiting period requirements of the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, as amended, 15 U.S.C. Sec.  18a (the ``HSR 
Act''), Bayer and Monsanto shall not, without providing advanced 
notification to the United States, directly or indirectly acquire a 
financial interest, including through securities, loan, equity, or 
management interest, in any company that researches, develops, 
manufactures, or sells digital agriculture products or soybean, cotton, 
canola, or corn seeds or traits. In addition, Bayer and Monsanto shall 
not acquire any digital agriculture assets, any trait assets, or all or 
substantially all of the germplasm assets from any such company without 
providing advanced notification to the United States.
    B. Such notification shall be provided to the United States in the 
same format as, and per the instructions relating to, the Notification 
and Report Form set forth in the Appendix to Part 803 of Title 16 of 
the Code of Federal Regulations as amended, except that the information 
requested in Items 5 through 8 of the instructions must be provided 
only about digital agriculture products or soybean, cotton, canola, or 
corn seeds or traits. Notification shall be provided at least thirty 
(30) calendar days prior to acquiring any such interest, and shall 
include, beyond what may be required by the applicable instructions, 
the names of the principal representatives of the parties to the 
agreement who negotiated the agreement, and any management or strategic 
plans discussing the proposed transaction. If within thirty (30) 
calendar days after notification, the United States makes a written 
request for additional information, Bayer and

[[Page 27668]]

Monsanto shall not consummate the proposed transaction or agreement 
until thirty (30) calendar days after submitting and certifying, in the 
manner described in Part 803 of Title 16 of the Code of Federal 
Regulations as amended, the truth, correctness, and completeness of all 
such additional information. Early termination of the waiting periods 
in this paragraph may be requested and, where appropriate, granted in 
the same manner as is applicable under the requirements and provisions 
of the HSR Act and rules promulgated thereunder. Section XII shall be 
broadly construed and any ambiguity or uncertainty regarding the filing 
of notice under Section XII shall be resolved in favor of filing 
notice.

XIII. RETENTION OF JURISDICTION

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIV. ENFORCEMENT OF FINAL JUDGMENT

    A. The United States retains and reserves all rights to enforce the 
provisions of this Final Judgment, including its right to seek an order 
of contempt from this Court. Defendants agree that in any civil 
contempt action, any motion to show cause, or any similar action 
brought by the United States regarding an alleged violation of this 
Final Judgment, the United States may establish a violation of this 
Final Judgment and the appropriateness of any remedy therefor by a 
preponderance of the evidence, and they waive any argument that a 
different standard of proof should apply.
    B. The Final Judgment should be interpreted to give full effect to 
the procompetitive purposes of the antitrust laws and to restore all 
competition harmed by the challenged conduct. Defendants agree that 
they may be held in contempt of, and that the Court may enforce, any 
provision of this Final Judgment that, as interpreted by the Court in 
light of these procompetitive principles and applying ordinary tools of 
interpretation, is stated specifically and in reasonable detail, 
whether or not it is clear and unambiguous on its face. In any such 
interpretation, the terms of the Final Judgment should not be construed 
against either party as the drafter.
    C. In any enforcement proceeding in which the Court finds that the 
Defendants have violated this Final Judgment, the United States may 
apply to the Court for a one-time extension of this Final Judgment, 
together with such other relief as may be appropriate. In connection 
with any successful effort by the United States to enforce this Final 
Judgment against a Defendant, whether litigated or resolved prior to 
litigation, that Defendant agrees to reimburse the United States for 
any attorneys' fees, experts' fees, and costs incurred in connection 
with that enforcement effort, including the investigation of the 
potential violation.

XV. EXPIRATION OF FINAL JUDGMENT

    Unless this Court grants an extension, this Final Judgment shall 
expire ten (10) years from the date of its entry, except that after six 
(6) years from the date of its entry, this Final Judgment may be 
terminated upon notice by the United States to the Court and Defendants 
that the divestitures have been completed and that the continuation of 
the Final Judgment no longer is necessary or in the public interest.

XVI. PUBLIC INTEREST DETERMINATION

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16, including making copies available to 
the public of this Final Judgment, the Competitive Impact Statement, 
and any comments thereon and the United States' responses to comments. 
Based upon the record before this Court, which includes the Competitive 
Impact Statement and any comments and responses to comments filed with 
this Court, entry of this Final Judgment is in the public interest.

Date:

[Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16]

-----------------------------------------------------------------------
United States District Judge

Appendix A

1. Bayer will retain thirty (30) office facilities largely dedicated 
to non-divested Bayer businesses in Argentina (Buenos Aires and 
Chacabuco), Brazil (Paulinia), Canada (Calgary, Ottawa, Rosthern, 
Saskatoon, and Winnipeg), Czech Republic (Prague), France (two sites 
in Lyon), Germany (Langenfeld and Monheim), Great Britain 
(Cambridge), Greece (Athens and Thessaloniki), Hungary (Budapest), 
Latvia (Riga), Poland (Warsaw), Romania (Bucharest), Russia 
(Moscow), Turkey (Adana, Gebze, Istanbul, Izmir, and Sanliurfa), 
Ukraine (Kiev), and the United States (Champaign, Clayton, and 
Inaha).

2. Bayer will retain one seed cleaning and bagging facility that is 
part of Bayer Crop Science headquarters in Monheim, Germany (known 
as ``EOPC'').

3. Bayer will retain fourteen (14) formulation and filling sites 
largely dedicated to non-divested Bayer products in Argentina 
(Zarate), Australia (Kwinana and Pinkenba), Brazil (Belford Roxo), 
China (Hangzhou), Colombia (Barranquilla), Germany (Frankfurt), 
Guatemala (Amatitl[aacute]n), Japan (Hofu), Korea (Daejeon), South 
Africa (Nigel), Spain (Quart de Poblet), Thailand (Bangpoo), and the 
United States (Kansas City).

4. Bayer will retain thirty-four (34) general office facilities 
largely dedicated to non-divested businesses in Algeria (Algiers), 
Argentina (Munro), Australia (Pinkenba), Belgium (Diegem), Canada 
(Guelph), Chile (Santiago de Chile), Colombia (Bogot[aacute]), Costa 
Rica (San Jos[eacute]), Denmark (Copenhagen), Egypt (Cairo), Germany 
(Monheim), Great Britain (Saffron Walden), Guatemala (Mixco), 
Hungary (Budapest), Iran (Tehran), Japan (Fukuoka), Kazakhstan 
(Astana), Kenya (Nairobi), Morocco (Casablanca and El Jadida), 
Panama (David), Peru (Ica and Lima), Poland (Warsaw), Portugal 
(Carnaxide), Romania (Bucharest), Russia (Krasnodar), Singapore 
(Singapore), South Korea (Anseong-si), Spain (Paterna), Ukraine 
(Kiev), the United States (two sites in West Sacramento), and 
Vietnam (Hanoi).

Appendix B: Monsanto Population Numbers

(1) JVK13764
(2) JVK13662
(3) JVK13647
(4) JVK13604
(5) JVK13363
(6) JVK13294
(7) JVK13624
(8) JVK13564
(9) JVK13301
(10) JVK13302
(11) JVK13304
(12) JVK13303
(13) JVK13305
(14) JVK13306
(15) JVK13307
(16) JVK13279
(17) JVK13281
(18) JVK13282
(19) JVK13283
(20) JVK13278
(21) JVK13280
(22) JVK13284
(23) JVK13592
(24) JVK13593
(25) JVK13596
(26) JVK13591
(27) JVK13594
(28) JVK13595
(29) JVK13598
(30) JVK13205
(31) JVK13224
(32) JVK13450
(33) JVK13455
(34) JVK13457
(35) JVK13458
(36) JVK13251
(37) JVK13451
(38) JVK13452

[[Page 27669]]

(39) JVK13453
(40) JVK13456
(41) JVK13761
(42) JVK13762
(43) JVK13763
(44) JVK13755
(45) JVK13756
(46) JVK13757
(47) JVK13758
(48) JVK13732
(49) JVK13733
(50) JVK13734
(51) JVK13735
(52) JVK13569
(53) JVK13570
(54) JVK13571
(55) JVK13572
(56) JVK13573
(57) JVK13446
(58) JVK13449
(59) JVK13153
(60) JVK13157
(61) JVK13176
(62) JVK13197
(63) JVK13209
(64) JVK13253
(65) JVK13272
(66) JVK13273
(67) JVK13274
(68) JVK13275
(69) JVK13276
(70) JVK13388
(71) JVK13389
(72) JVK13390
(73) JVK13391
(74) JVK13394
(75) JVK13387
(76) JVK13392
(77) JVK13393
(78) JVK13231
(79) JVK13669
(80) JVK13670
(81) JVK13675
(82) JVK13252
(83) JVK13673
(84) JVK13396
(85) JVK13397
(86) JVK13400
(87) JVK13395
(88) JVK13398
(89) JVK13401
(90) JVK13402
(91) JVK13379
(92) JVK13380
(93) JVK13382
(94) JVK13383
(95) JVK13384
(96) JVK13386
(97) JVK13385
(98) JVK13723
(99) JVK13721
(100) JVK13634
(101) JVK13635
(102) JVK13638
(103) JVK13639
(104) JVK13640
(105) JVK13641
(106) JVK13583
(107) JVK13584
(108) JVK13585
(109) JVK13586
(110) JVK13587
(111) JVK13588
(112) JVK13590
(113) JVK13612
(114) JVK13615
(115) JVK13617
(116) JVK13618
(117) JVK13619
(118) JVK13692
(119) JVK13699
(120) JVK13207
(121) JVK13230
(122) JVK13259
(123) JVK13574
(124) JVK13576
(125) JVK13577
(126) JVK13578
(127) JVK13579
(128) JVK13582
(129) JVK13434
(130) JVK13428
(131) JVK13429
(132) JVK13430
(133) JVK13431
(134) JVK13432
(135) JVK13433
(136) JVK13435
(137) JVK13204
(138) JVK13216
(139) JVK13370
(140) JVK13371
(141) JVK13372
(142) JVK13373
(143) JVK13375
(144) JVK13376
(145) JVK13377
(146) JVK13378
(147) JVK13374
(148) JVK13504
(149) JVK13505
(150) JVK13506
(151) JVK13507
(152) JVK13508
(153) JVK13509
(154) JVK13510
(155) JVK13503
(156) JVK13702
(157) JVK13703
(158) JVK13700
(159) JVK13701
(160) JVK13707
(161) JVK13258
(162) JVK13459
(163) JVK13460
(164) JVK13461
(165) JVK13462
(166) JVK13463
(167) JVK13464
(168) JVK13465
(169) JVK13466
(170) JVK13257
(171) JVK13408
(172) JVK13410
(173) JVK13404
(174) JVK13405
(175) JVK13406
(176) JVK13407
(177) JVK13409
(178) JVK13353
(179) JVK13354
(180) JVK13355
(181) JVK13357
(182) JVK13356
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    United States of America, Plaintiff, v. BAYER AG, MONSANTO 
COMPANY, and BASF SE, Defendants.

Civil Action No.: 1:18-cv-1241
Judge James E. Boasberg

COMPETITIVE IMPACT STATEMENT

    Pursuant to Section 2(b) of the Antitrust Procedures and Penalties 
Act (``APPA'' or ``Tunney Act''), 15 U.S.C. Sec.  16(b), Plaintiff 
United States of America files this Competitive Impact Statement 
relating to the proposed Final Judgment submitted on May 29, 2018, for 
entry in this civil antitrust proceeding.

I. NATURE AND PURPOSE OF THE PROCEEDING

    On September 14, 2016, Defendant Bayer AG (``Bayer'') agreed to 
acquire Defendant Monsanto Company (``Monsanto'') in a merger valued at 
approximately $66 billion. The United States filed a civil antitrust 
Complaint against Bayer and Monsanto on May 29, 2018, seeking to enjoin 
the proposed merger. The Complaint alleges that the proposed merger 
would lessen competition substantially across various markets in the 
agricultural industry, resulting in higher prices, less innovation, 
fewer choices, and lower-quality products for American farmers and 
consumers, in violation of Section 7 of the Clayton Act, 15 U.S.C. 
Sec.  18.
    Simultaneously with the filing of the Complaint, the United States 
has filed a proposed Final Judgment and a Stipulation and Order 
designed to prevent the merger's likely anticompetitive effects. As 
detailed below, the proposed Final Judgment requires Bayer to divest 
its businesses that compete with Monsanto, the seed treatment 
businesses that the merged firm would use to harm competition in 
certain seed markets, and assets supporting those businesses 
(collectively, the ``Divestiture Assets''). Bayer has agreed to divest 
the Divestiture Assets to BASF SE (``BASF''), a global chemical company 
with a multi-billion-dollar crop protection business.\1\ The required 
divestitures will ensure that BASF replaces Bayer as an independent and 
vigorous competitor in each of the

[[Page 27671]]

markets in which the proposed merger would otherwise lessen 
competition.
---------------------------------------------------------------------------

    \1\ Bayer, Monsanto, and BASF are referred to collectively as 
``Defendants.''
---------------------------------------------------------------------------

    The terms of the Stipulation and Order require Defendants to take 
certain steps to ensure that, pending the required divestitures, all of 
the Divestiture Assets will be preserved and that Monsanto will 
continue to be operated independently as a separate business concern.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, although the 
Court would continue to retain jurisdiction to construe, modify, or 
enforce the provisions of the proposed Final Judgment and to punish 
violations thereof.

II. DESCRIPTION OF THE EVENTS GIVING RISE TO ALLEGED VIOLATION

A. The Defendants and the Merger

    Bayer is a life-sciences company based in Leverkusen, Germany. The 
company employs nearly 100,000 people worldwide and has operations in 
nearly 80 countries. Bayer has three main business lines: (1) 
pharmaceuticals, (2) consumer health, and (3) agriculture, the last of 
which is the Bayer Crop Science division. Over the past decade, Bayer 
Crop Science has become one of the largest global agricultural firms. 
Today, its crop protection business is the second largest in the world, 
and its seeds and traits business is also among the world's largest. 
Bayer Crop Science generated almost $12 billion in annual revenues in 
2017.
    Monsanto is a leading producer of agricultural products based in 
St. Louis, Missouri. Over 20,000 people work for the company in almost 
70 countries. Monsanto's innovative technologies have established it as 
a global leader in agriculture; today, it is the leading global 
producer of seeds and traits and is among the world's largest producers 
of crop protection products. In 2017, Monsanto had almost $15 billion 
in annual revenues.
    On September 14, 2016, Bayer agreed to acquire Monsanto for 
approximately $66 billion. In recognition of the significant 
competitive concerns raised by the proposed merger, Bayer has agreed to 
divest agricultural assets valued at approximately $9 billion to BASF. 
As discussed in Section III.K, infra, BASF has agreed to be bound by 
the terms of the proposed Final Judgment.

B. The Competitive Effects of the Proposed Merger across Agricultural 
Markets in the United States

    The Complaint alleges that the proposed merger would reduce 
competition in the United States in 17 distinct agricultural product 
markets. These markets fit into four broad categories: (1) genetically 
modified (``GM'') seeds and traits, (2) foundational herbicides, (3) 
seed treatments, and (4) vegetable seeds. In addition to 
anticompetitive effects in each of the product markets resulting from 
the loss of head-to-head competition or vertical foreclosure, the 
Complaint also alleges that the merger would have a significant impact 
on innovation. Without the merger, competition between Bayer and 
Monsanto would intensify as both companies pursue what the industry 
refers to as ``integrated solutions''--combinations of seeds, traits, 
and crop protection products, supported by digital farming technologies 
and other services. Without the proposed Final Judgment, that 
competition would be lost.

1. GM Seeds and Traits

    Bayer and Monsanto are close competitors in the GM seeds and traits 
markets for three important U.S. row crops: cotton, canola, and 
soybeans. As described in the Complaint, the proposed merger would 
likely lead to a substantial lessening of competition in each of these 
markets, resulting in hundreds of millions of dollars in harm each year 
to American farmers and consumers.
    Cotton is a major crop grown across the southern United States. 
Cotton seeds are widely used in vegetable oil, packaged foods, and 
animal feed, and cotton fibers are widely used in clothing. In 2017, 
U.S. farmers planted about 12 million acres of cotton accounting for 
over $800 million in seed purchases.
    Canola is an important crop used in vegetable oil, packaged foods, 
biodiesel fuels, and animal feed. In the United States, canola is grown 
on approximately 1.7 million acres, mainly in North Dakota but also in 
several other states. GM canola seeds accounted for $83 million in 
domestic sales in 2016.
    Soy is the second-largest crop grown in the United States. Soybeans 
are widely used in vegetable oil, packaged foods, and animal feed. In 
2017, U.S. farmers planted almost 90 million acres of soybeans 
accounting for $4.64 billion in seed purchases.
    A genetic trait is simply an attribute of a plant, such as being 
tall, short, or leafy. In most cases, plant traits derive from the 
plant's natural DNA; however, a small number of highly sophisticated 
biotechnology firms can insert DNA from other organisms into the DNA of 
a plant, giving the plant a desirable trait associated with that non-
native DNA. A GM seed is a seed that contains DNA, and hence a 
desirable trait, of a different organism. Scientists have developed 
herbicide-tolerant traits that give crops the ability to withstand 
exposure to herbicides that would normally damage or kill them, 
allowing a farmer to spray the herbicide over an entire field and 
efficiently kill weeds without harming the crop. Scientists also have 
developed traits that make crops resistant to certain insect pests, 
allowing farmers to prevent these pests from damaging their crops while 
also reducing farmers' use of chemical insecticides. Today, more than 
90% of the soybeans, cotton, and canola grown in the United States is 
grown from GM seeds.

a) Relevant Markets

    As alleged in the Complaint, GM cotton seeds, GM canola seeds, and 
GM soybeans are each relevant product markets under Section 7 of the 
Clayton Act. In canola and soy, nearly all GM seeds contain herbicide-
tolerant traits, but no seeds contain insect-resistant traits. In 
cotton, most GM seeds contain both herbicide-tolerant traits and 
insect-resistant traits (found on 98% and 88% of all cotton acres, 
respectively). The vast majority of farmers do not view conventional 
(i.e., non-GM) seeds as a substitute for GM cotton, GM canola, or GM 
soybeans because GM seeds eliminate much of the labor and expense 
associated with more traditional means of weed and pest management, 
offer higher yields, and reduce soil erosion by decreasing tillage 
requirements. Accordingly, a hypothetical monopolist of any of these GM 
seeds markets could profitably raise prices.
    The Complaint also alleges that insect-resistant traits for cotton 
and herbicide-tolerant traits for cotton, canola, and soybeans are 
relevant product markets under Section 7 of the Clayton Act. Again, the 
vast majority of farmers growing cotton, canola, and soybeans in the 
United States choose to purchase GM seeds and do not consider 
conventional seeds an acceptable alternative. Consequently, GM traits 
are necessary inputs for most seed companies, and a hypothetical 
monopolist of any of the trait markets listed above could profitably 
raise prices.
    The Complaint alleges that the relevant geographic markets for 
these

[[Page 27672]]

GM seeds and traits markets are regional because seeds are tailored to 
local growing conditions (such as weather and soil type), and suppliers 
can charge different prices to customers in different regions. In 
cotton and canola, however, virtually all of the regions affected by 
the merger have similar market conditions, so the regions can 
reasonably be aggregated to a national level for purposes of analysis. 
For soybeans, the market structure differs across regions, and the 
relevant geographic market in which the merger will lead to harm is the 
southern United States, where Bayer has focused its soybean breeding 
program and been particularly successful.

b) Competitive Effects--GM Seeds

    The market for GM cotton seeds in the United States is highly 
concentrated and would become significantly more so if Bayer were 
allowed to acquire Monsanto. Bayer and Monsanto have long been the two 
leading suppliers of GM cotton seeds throughout the United States. In 
addition to owning critical herbicide-tolerant and insect-resistant 
traits, discussed in more detail below, the companies each own 
extensive libraries of elite seed varieties, which are essential for 
breeding and commercializing competitive cotton seeds. If the proposed 
merger were allowed to proceed, Bayer and Monsanto would have a 
combined 59% share of GM cotton seeds in the United States.
    In the market for GM canola seeds in the United States, Bayer and 
Monsanto are by far the two largest competitors, with a combined share 
of approximately 74%. Bayer and Monsanto compete aggressively, and 
Bayer's canola innovations in recent years have allowed it to surpass 
Monsanto, previously the largest firm in this market.
    In the market for GM soybeans, the proposed merger would eliminate 
Bayer as a uniquely positioned challenger to Monsanto, which has 
dominated the market since traits were first commercialized in soybeans 
in the 1990s. For years, Monsanto's competitors relied on Monsanto for 
licenses to GM traits and, in most cases, for licenses to seed 
varieties as well. Bayer, however, invested over $250 million to 
develop an independent source of soybean varieties and launched its own 
branded soybean business, Credenz, which sells varieties that perform 
well in the southern United States. In 2017, Monsanto had a 39% market 
share in that region, with Bayer holding a 6% share that it planned to 
grow in the future.
    Even these figures significantly understate the level of dominance 
the merged company would have in each of these markets. Monsanto 
licenses seeds with traits to certain smaller seed companies (referred 
to in the industry as ``independent seed companies''), leaving these 
smaller rivals with limited ability to exert competitive pressure on 
the merged firm.

c) Competitive Effects--GM Traits

    In addition to effects in each GM seed market, the proposed merger 
would harm American farmers by eliminating head-to-head competition 
between Bayer and Monsanto to develop and sell GM traits. These trait 
markets are even more highly concentrated than the GM seed markets. 
Bayer and Monsanto effectively have a duopoly in cotton herbicide-
tolerant traits, and the proposed merger would lead to a monopoly. In 
2017, Bayer's herbicide-tolerant cotton traits accounted for 19% of the 
market, and Monsanto's accounted for 80%. The proposed merger would 
also lead to a substantial increase in concentration in the market for 
canola herbicide-tolerant traits; virtually all canola seeds planted in 
the United States contain either a Bayer or a Monsanto trait. In the 
soybean herbicide-tolerant trait market, Bayer has chipped away at 
Monsanto's position, and the merger threatens to eliminate Monsanto's 
only serious challenger. In 2017, Bayer and Monsanto represented 14% 
and 67% of the market, respectively, with the remainder attributable to 
market participants using an off-patent version of Monsanto's original 
Roundup Ready trait. Finally, the merger would also significantly 
increase concentration in the already highly concentrated market for 
insect-resistant traits for cotton; Bayer and Monsanto accounted for 
10% and 75% of that market, respectively, in 2017.
    Without the merger, competition between the two companies across 
the GM trait markets would likely increase over time. Bayer and 
Monsanto each have new traits in their research pipelines that would 
confer tolerance to additional herbicides, and farmers would benefit as 
Bayer and Monsanto continued to develop these new innovations.

d) Entry and Expansion in GM Seeds and Traits Markets

    Entry is unlikely to counteract the anticompetitive effects of the 
proposed merger in any of the GM seed or GM trait markets. To compete 
in a GM seed market, a company must have high-quality varieties for the 
current growing season and access to a deep and diverse collection of 
high-quality seeds for breeding future varieties. The varieties must 
also be suitable for the particular geographic region. Elite seed 
varieties suitable for regions in the United States are increasingly 
difficult to procure and are controlled largely by a handful of 
vertically integrated companies, including Monsanto, Bayer, DowDuPont, 
and Syngenta. In addition, the time, expense, and expertise required to 
commercialize a GM trait is prohibitive for all but these four 
companies. Although certain smaller companies may participate in some 
limited aspect of initially discovering a trait, they do not have the 
ability to commercialize these traits.

2. Foundational Herbicides

    In addition to competing to sell herbicide-tolerant seeds, Bayer 
and Monsanto also compete to sell the herbicides that are paired with 
them. Monsanto's Roundup Ready seeds are engineered to tolerate the 
herbicide glyphosate, which Monsanto sells under its Roundup brands, 
while Bayer's LibertyLink seeds are engineered to tolerate glufosinate 
ammonium, the herbicide that Bayer sells under the Liberty brand. These 
``foundational'' herbicides, glyphosate and glufosinate, have unique 
characteristics that make them important competitive alternatives for 
farmers.

a) Relevant Market

    The Complaint alleges that foundational herbicides constitute a 
relevant product market under Section 7 of the Clayton Act. 
Foundational herbicides are herbicides used on row crops that have two 
defining characteristics. First, they are ``non-selective,'' meaning 
that they kill all types of weeds, thus providing farmers with the 
broadest possible protection for their crops. In contrast, other types 
of herbicides are ``selective,'' meaning that they kill only certain 
types of weeds. Selective herbicides are often used to supplement non-
selective herbicides but are not generally used in lieu of them. 
Second, foundational herbicides can be paired with seeds that are 
engineered to tolerate the herbicide. Other non-selective herbicides 
are not a substitute for farmers because no seeds are engineered to 
withstand them, so spraying those herbicides over a crop would damage 
it. For these reasons, farmers have no good substitutes for 
foundational herbicides, and a hypothetical monopolist would find it 
profitable to increase the price of some foundational herbicides by a 
small but significant amount. Today, glyphosate

[[Page 27673]]

and glufosinate are the only two foundational herbicides, but, as 
discussed further below, new foundational herbicides are in 
development.

b) Competitive Effects

    The proposed merger would combine the world's leading producers of 
foundational herbicides and would lead to a presumptively 
anticompetitive increase in market concentration. Since the launch of 
herbicide-tolerant crops in the 1990s, Monsanto's Roundup has dominated 
the market. As some weeds have developed resistance to glyphosate, 
however, farmers are increasingly turning to Liberty. While glufosinate 
and glyphosate are now off patent, competition from generic suppliers 
has not prevented Bayer and Monsanto from maintaining branded price 
premiums. In 2017, Bayer held a 7% share and Monsanto held a 53% share, 
with generic manufacturers holding the remaining share.
    The proposed merger is also likely to eliminate competition between 
Bayer and Monsanto to develop next-generation weed management systems. 
The Complaint explains that Bayer is developing new foundational 
herbicides and related herbicide-tolerant traits that would rival 
Monsanto's Roundup Ready-based systems. Likewise, Monsanto is actively 
pursuing innovations in foundational herbicides, including improvements 
to its Roundup formulations. Absent the merger, Bayer and Monsanto 
would each have incentives to pursue these competing pipeline products 
because any new innovations developed would help win market share from 
the other. In contrast, the merged firm will have different incentives 
due to heightened concerns that new innovations would simply 
cannibalize sales.

c) Entry and Expansion

    As alleged in the Complaint, the anticompetitive effects of the 
proposed merger would not be remedied by entry or expansion in the 
foundational herbicide market. The manufacture of foundational 
herbicides is complex and hazardous, requiring regulatory and safety 
approvals, which are expensive and time-consuming to secure. 
Reputation, brand loyalty, and economies of scale also present barriers 
to entry and expansion.

3. Seed Treatments

    Seed treatments are coatings applied to seeds that can protect the 
seed and the young plant from various insects or diseases. Seed 
treatments are a critical tool for farmers, and one or more seed 
treatments are applied to the majority of GM seeds sold in the United 
States today. Multiple seed treatments can be applied to a seed to 
protect it from various threats; seed treatments designed for one 
purpose (e.g., killing insects) are rarely an effective substitute for 
seed treatments designed for a different purpose (e.g., controlling 
fungal plant diseases).
    The Complaint alleges that the proposed merger would likely result 
in three forms of competitive harm related to seed treatments: (1) the 
loss of head-to-head competition between Bayer's and Monsanto's seed 
treatments for nematodes, (2) vertical foreclosure effects resulting 
from the combination of Monsanto's strong position in corn seeds with 
Bayer's substantial position in insecticidal seed treatments for corn 
rootworm, and (3) vertical foreclosure effects resulting from the 
combination of Monsanto's strong position in soybeans with Bayer's 
substantial position in fungicidal seed treatments for soybean sudden 
death syndrome.

a) Nematicidal Seed Treatments for Corn, Cotton, and Soybeans

    Nematicidal seed treatments protect crops from parasitic roundworms 
known as nematodes. Farmers have no cost-effective alternatives to 
nematicidal seed treatments. Seed treatments are approved for use by 
the government on a crop-by-crop basis, so a soybean farmer, for 
example, chooses between a different set of competitive alternatives 
than a cotton farmer. Accordingly, the Complaint alleges that 
nematicidal seed treatments for corn, cotton, and soybean seeds are 
each relevant markets under Section 7 of the Clayton Act and that a 
hypothetical monopolist in each market could profitably raise prices.
    All three nematicidal seed treatment markets are highly 
concentrated. For years, Bayer has had a monopoly in the market for 
nematicidal seed treatments for corn; in 2017, its market share was 
over 95%. Bayer also dominates the market for nematicidal seed 
treatments for soybeans, with a share over 85%. And in the market for 
nematicidal seed treatments for cotton, Bayer and Syngenta currently 
split the market roughly evenly.
    Although Monsanto does not currently sell any nematicidal seed 
treatments, it is about to launch its first product, NemaStrike. 
Without the merger, both Bayer and Monsanto expected NemaStrike to 
capture significant share from Bayer in all three seed treatment 
markets. The Complaint alleges that the proposed merger would harm 
competition in the nematicidal seed treatment market by removing the 
most significant threat to Bayer's dominance.

b) Vertical Foreclosure--Seed Treatments for Corn Rootworm and GM Corn 
Seeds

    Corn is the largest crop grown in the United States, accounting for 
over $8 billion in seed sales annually. Over 90% of U.S. corn seeds are 
genetically modified, and, like the other GM seeds discussed above, GM 
corn seeds are a relevant product market under Section 7 of the Clayton 
Act. Although Bayer does not sell corn seeds, Monsanto effectively 
controls 50% of the market and faces only one major rival.
    Corn rootworm is a destructive pest that can devastate a farmer's 
fields. To deal with this threat, some farmers rely on Bayer's Poncho 
insecticidal seed treatment. For many farmers, there are no cost-
effective alternatives to insecticidal seed treatments. Because Poncho 
is the only seed treatment that offers meaningful protection against 
corn rootworm, corn seed companies purchase Bayer's insecticidal seed 
treatment to apply to their seeds so they can offer a competitive 
product.
    The merger would likely harm competition in the market for GM corn 
seeds by combining Monsanto's strong position in GM corn seeds with 
Bayer's dominant position in insecticidal seed treatments for corn 
rootworm. The merged firm would have the incentive and ability to make 
its corn seed rivals less competitive by forcing them to pay more for 
Poncho or cutting off their supply of the product. This would limit 
farmers' choices, reduce competition, and ultimately allow the merged 
firm to increase the price for GM corn seeds.

c) Vertical Foreclosure--Fungicidal Seed Treatments for Sudden Death 
Syndrome and GM Soybeans

    The merger is likely to have similar effects in soy. Sudden death 
syndrome (``SDS'') is a fungal disease afflicting millions of soybean 
acres across the United States. In 2015, Bayer began selling ILeVO, the 
only effective fungicidal seed treatment combatting SDS, and ILeVO's 
sales have doubled annually since its introduction. The merger is 
likely to reduce competition by combining Monsanto's leading GM soybean 
business with Bayer's dominant position in fungicidal seed treatments 
for SDS. The merged firm would have the incentive and ability to make 
its soybean rivals less competitive by charging them more for ILeVO or 
cutting off their supply, diminishing competition in the market for GM 
soybeans and reducing choices available to farmers.

[[Page 27674]]

d) Entry and Expansion

    As alleged in the Complaint, the anticompetitive effects of the 
proposed merger would not be remedied by entry or expansion in the 
relevant seed treatment markets. Developing a new, effective seed 
treatment is a slow, costly, and difficult process, and new seed 
treatments require extensive regulatory approvals before farmers can 
use them. Generic versions of the Bayer seed treatments discussed above 
will not be available for at least the next several years due to 
various intellectual property protections. Neither expansion by 
existing seed treatments nor new seed treatments expected to launch in 
the next several years would prevent the anticompetitive effects of the 
proposed merger.

4. Vegetables

    Finally, the Complaint alleges that the proposed merger is likely 
to substantially lessen competition in the markets for five types of 
vegetable seeds: carrots, cucumbers, onions, tomatoes, and watermelons. 
Overall, Monsanto is the largest global vegetable seed company, while 
Bayer is the fourth largest, and the two companies are strong 
competitors in all five of these markets.

a) Relevant Markets

    The Complaint alleges that the seeds markets for carrots, 
cucumbers, onions, tomatoes, and watermelons each constitute a relevant 
market under Section 7 of the Clayton Act. Each vegetable species has 
unique characteristics, and other crops are not viable substitutes. 
Many vegetable seed customers rely on access to particular types of 
vegetables to operate their businesses. For example, in the United 
States, companies that sell pre-cut baby carrots and other carrot 
products, such as juice, purchase carrot seeds to grow their carrots. 
These companies are unlikely to begin growing a different crop in large 
quantities in response to a price increase. Nor are other farmers 
likely to switch crops in response to a price increase because they 
have invested in crop-specific facilities and equipment, possess 
specialized crop-specific knowledge, or live in an area best suited to 
growing that particular type of vegetable. A hypothetical monopolist of 
any of the five vegetable seed species would find it profitable to 
increase prices by at least a small but significant amount because the 
bulk of farmers would not switch away from their preferred vegetable 
crops in response. As vegetable seeds are bred to thrive in particular 
regions of the country, geographic markets are regional, but, similar 
to row crops, virtually all regions affected by the merger have similar 
market structure, so in this case it is appropriate to aggregate these 
regions to the national level for convenience.

b) Competitive Effects

    Bayer and Monsanto are among the largest domestic producers of all 
the vegetable seeds at issue. The Complaint alleges that the proposed 
merger would significantly increase concentration in each market, and 
each market would be highly concentrated with few, if any, other 
significant competitors. In carrots and cucumbers, the merged firm 
would enjoy near-complete dominance, with market shares of 94% and 90%, 
respectively. The combined company would also have high market shares 
in onion seeds (71%) and tomato seeds (55%). In watermelon seeds, Bayer 
holds a 37% market share while Monsanto has a 6% share, with only one 
other significant competitor. Monsanto's market share in watermelon 
seeds understates its competitive significance; its recent introduction 
of competitive seedless watermelon varieties, which are in high demand 
and already offered by Monsanto's competitors, will likely 
significantly improve its position going forward. In each of these 
markets, the proposed merger would eliminate the significant 
competition between Bayer and Monsanto, not only on price, but also on 
quality and innovation, to the overall detriment of American farmers 
and consumers.

c) Entry and Expansion

    Firms that sell vegetable seeds use modern breeding techniques that 
require access to advanced technologies and elite seed varieties, 
making entry challenging. In addition, entering a new vegetable seed 
market can be expensive and time consuming because successful vegetable 
seed companies must invest continuously in developing new, improved 
varieties, some of which can take over a decade to breed and 
commercialize. Certain vegetable markets present additional unique 
challenges; for instance, onions are among the hardest vegetable seeds 
to produce, in part, because they are biennials, generating seed only 
every other growing season.

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The proposed Final Judgment remedies the anticompetitive effects of 
the merger by requiring Bayer to divest its businesses in each relevant 
market, along with various supporting assets, to BASF, a global 
chemical company with an existing agricultural crop protection 
business. To ensure that BASF would replace Bayer as an effective 
competitor and innovator in each of the 17 markets in which the 
Complaint alleges that the proposed merger would harm competition, the 
United States carefully scrutinized the merging parties' and BASF's 
businesses and operations to identify a comprehensive package of 
businesses and supporting assets for divestiture. Collectively, these 
transfers encompass the suite of businesses and assets that constitute 
the divestiture package.
    In evaluating the remedy, the United States recognized that fully 
preventing the competitive effects of a merger in some cases requires 
the inclusion of assets or projects that are beyond the affected 
relevant markets. As the U.S. Department of Justice Antitrust Division 
Policy Guide to Merger Remedies explains, the United States will 
exercise its enforcement discretion to accept a divestiture only when 
it is persuaded that the divested ``assets will create a viable entity 
that will effectively preserve competition.'' See Antitrust Division 
Policy Guide to Merger Remedies at 9 (June 2011) (available at https://www.justice.gov/atr/public/guidelines/272350.pdf). Because Bayer does 
not operate its businesses that compete with Monsanto as separate, 
standalone entities, to ensure effective relief the United States is 
also requiring the divestiture of assets that are complementary to the 
competitive products or that use shared resources. See id. at 11 
(``[I]ntegrated firms can provide scale and scope economies that a 
purchaser may not be able to achieve by obtaining only those assets 
related to the relevant product(s).''). Finally, effective relief also 
requires divestiture of those ``pipeline'' research projects that Bayer 
is pursuing to ensure the future competitive significance of the 
divested businesses.
    Guided by these principles, the United States identified a 
divestiture package that remedies the various dimensions of harm 
threatened by the proposed merger. First, the proposed Final Judgment 
requires Bayer to divest those businesses that vigorously compete head-
to-head with Monsanto today. Second, to address certain vertical 
concerns, the proposed Final Judgment requires Bayer to divest seed 
treatment businesses that would give the combined company the incentive 
and ability to harm competition by raising the prices it charges rival 
seed companies. Third, because Bayer and Monsanto compete to develop 
new products and services for farmers, the

[[Page 27675]]

proposed Final Judgment requires the divestiture of associated 
intellectual property and research capabilities, including ``pipeline'' 
projects, to enable BASF to replace Bayer as a leading innovator in the 
relevant markets. Fourth, the proposed Final Judgment requires the 
divestiture of additional assets that will give BASF the scale and 
scope to compete effectively today and in the future.
    Because many of the divested assets will be separated from Bayer's 
existing business units and incorporated into BASF, the proposed Final 
Judgment includes provisions aimed at ensuring that the assets are 
handed off in a seamless and efficient manner. To that end, Bayer is 
required to transfer existing third-party agreements and customer 
information to BASF, as well as to enter transition services agreements 
that ensure that BASF can continue to serve customers immediately upon 
completion of the divestitures. The transition services and interim 
supply agreements are time-limited to ensure that BASF will become 
fully independent of Bayer as soon as practicable. The proposed Final 
Judgment also requires Bayer to warrant that the assets being divested 
are sufficient for BASF to maintain the viability and competitiveness 
of the divested businesses following BASF's acquisition of the assets. 
In addition, it gives BASF a one-year window after closing to identify 
any additional assets that are reasonably necessary to ensure the 
continued competitiveness of the divested businesses. The United States 
will have the sole discretion to determine if Bayer must divest these 
additional assets. Finally, the proposed Final Judgment gives BASF the 
ability to hire all of the personnel from Bayer needed to support these 
businesses.
    BASF is the only buyer the United States has evaluated and deemed 
suitable to resolve the range of competitive concerns raised by the 
merger. BASF already has extensive agricultural experience, but it 
lacks a seeds and traits business. Combining the businesses and assets 
being divested with BASF's existing portfolio will allow it to become 
an integrated player and an effective industry competitor to the merged 
company and the other integrated players. BASF will have full control 
over these divested businesses, including the ability to assign 
licenses and other rights.
    In sum, the proposed remedies will ensure that BASF can step into 
Bayer's shoes, thereby preserving the competition that the merger would 
otherwise destroy. The monitoring trustee to be appointed will have 
close oversight over the divestitures to ensure they proceed 
efficiently (see, infra, Section III.H). And, as additional protection, 
the proposed Final Judgment includes robust mechanisms that will allow 
the United States and the Court to monitor the effectiveness of the 
relief and to enforce compliance.

A. GM Seeds and Traits

    Section IV of the proposed Final Judgment requires Bayer to divest 
all assets used by Bayer's GM seeds and traits businesses in the United 
States, including Bayer's cotton, canola, and soybean seeds and traits 
businesses, as well as almost all of the assets associated with Bayer's 
other global GM seeds and traits businesses. Because Bayer and Monsanto 
are currently competing to introduce the next blockbuster trait or 
plant variety, BASF can replace Bayer as a competitor only if BASF 
obtains all the assets required to continue Bayer's legacy of 
innovation. This includes all assets needed to offer farmers the new 
products that Bayer was poised to commercialize in the coming years. 
Notably, BASF will receive all of Bayer's trait research centers 
(including facilities in Morrisville, North Carolina; Ghent, Belgium; 
and Astene, Belgium). The proposed Final Judgment also requires Bayer 
to transfer all intangible assets used by these businesses, such as 
patents, know-how, and licenses or permits issued by government 
agencies.
    There are limited exceptions to Bayer's obligation to divest all of 
the assets used by its global GM seeds and traits businesses. Certain 
assets used exclusively to support a handful of Bayer's small seed 
businesses or research programs outside of the United States are 
excluded from the Divestiture Assets. These exceptions are related to 
(1) rice seed, which Bayer sells only in Asia; (2) Bayer's millet, 
mustard, and cotton seed businesses in India; (3) R&D programs for 
Brazilian sugarcane and European sugarbeets; and (4) Bayer's cotton 
seed business in South Africa. None of these is closely related to the 
divested U.S. seeds and traits businesses. Bayer will also retain a 
number of general office facilities that house employees of businesses 
not affected by the divestitures, as well as one seed cleaning and 
bagging facility in Germany that is part of Bayer's Crop Science 
headquarters.
    The proposed Final Judgment also requires Bayer to provide BASF 
with certain complementary assets, which will give scale and scope 
benefits to the divested GM seeds and traits businesses, and supply 
agreements, which will allow BASF to maintain the competitiveness of 
those businesses as they are transitioned from Bayer.
    First, the proposed Final Judgment requires divestiture of Bayer's 
R&D programs associated with wheat. Bayer does not currently sell wheat 
in the United States, but it has been pursuing wheat-related research 
to expand the scope of its global seeds and traits portfolio and 
sustain the level of R&D investment these businesses require. Because 
seed and trait innovations can often be applied across multiple crops, 
a broader seed and trait portfolio will provide the promise of higher 
returns on investment and increase the incentive to innovate. The 
proposed Final Judgment preserves the scope efficiencies that Bayer 
enjoys today by keeping these businesses together. Moreover, separating 
the wheat business from Bayer's other seeds and traits businesses would 
have required disentangling and dividing integrated operations and 
assets. For instance, Bayer's research facility in Ghent, Belgium is 
used to support R&D for wheat as well as other crops. By requiring the 
divestiture of Bayer's wheat R&D programs and related facilities, the 
proposed Final Judgment ensures that BASF has all of the tools needed 
to run the divested businesses and can leverage these common resources 
as effectively as Bayer does today.
    Second, under Paragraph IV.G of the proposed Final Judgment, Bayer 
will supply BASF with the seed treatments Bayer currently applies to 
its row crop seeds for a period of up to two years, with extensions 
subject to approval by the United States. This will allow BASF to offer 
farmers the same combinations of seeds and seed treatments that Bayer 
offers today without interruption. During the term of these supply 
agreements, BASF will transition to using (1) its own seed treatments, 
(2) the seed treatments it is acquiring from Bayer pursuant to the 
proposed Final Judgment (discussed in more detail below), (3) seed 
treatments from alternate suppliers, or (4) a combination thereof.
    Third, Paragraph IV.N of the proposed Final Judgment requires Bayer 
to divest certain groups of Monsanto soybeans used for research and 
breeding (referred to in the industry as ``germplasm''). As discussed 
in the Complaint, Bayer has aggressively challenged Monsanto in the 
soybean market, and planned to continue to expand. However, Bayer 
currently lacks soybeans suitable for the Midwest, an important soybean 
growing region in the United States. By providing BASF with a richer 
pool of genetic material, the proposed Final Judgment creates a strong 
incentive for

[[Page 27676]]

BASF to continue Bayer's efforts to disrupt the market and provide new 
benefits to farmers and consumers.

B. Foundational Herbicides

    Section IV of the proposed Final Judgment also requires Bayer to 
divest assets relating to its foundational herbicides business. The 
proposed Final Judgment requires Bayer to divest all intellectual 
property related to glufosinate, the active ingredient in Bayer's 
Liberty herbicide, including intellectual property relating to mixtures 
of glufosinate with other chemicals. Bayer is also required to divest 
its R&D projects, which will incentivize BASF to continue to develop 
new innovations for farmers.
    In addition, Bayer will be required to divest all facilities used 
to manufacture glufosinate. Bayer will also divest certain facilities 
used to ``formulate'' (i.e., mix with water and other inactive 
ingredients) and package glufosinate to create Liberty for sale to 
customers. Specifically, the proposed Final Judgment requires Bayer to 
divest its large North American facilities in Regina, Canada and 
Muskegon, Michigan, which formulate and package a significant 
percentage of the Liberty sold in the United States. Because Bayer's 
global formulation facilities are also used for unrelated products not 
being divested and supply very little of the Liberty used in the United 
States, the proposed Final Judgment permits Bayer to retain some 
formulation facilities, most of which are located outside the United 
States. However, Paragraph IV.G of the proposed Final Judgment requires 
Bayer to enter into an agreement to formulate Liberty for BASF, at 
cost, for up to three years to ensure that BASF can meet farmer demand 
for the product during the transition. The proposed Final Judgment 
limits the duration of these formulation services to ensure that BASF 
will become fully independent of Bayer as soon as practicable.
    In certain countries outside of the United States, the proposed 
Final Judgment also provides that Bayer will distribute glufosinate 
products on BASF's behalf for a limited period. This accommodation 
affects only a small portion of total glufosinate sales and ensures 
business continuity in those international jurisdictions in which BASF 
requires time to develop the business infrastructure or to secure the 
local regulatory authorizations necessary to sell the product. To 
encourage BASF to become fully independent from Bayer as soon as 
practicable, the proposed Final Judgment limits the duration of these 
services, and BASF can terminate these distribution contracts on a 
country-by-country basis as soon as it is able to distribute these 
products on its own.

C. Pipeline Herbicides

    The proposed Final Judgment requires the divestiture of certain 
crop protection products that are complementary to Bayer's trait 
business. Today, Bayer engages in parallel research across its various 
seeds and crop protection businesses, developing new herbicides and new 
traits that confer tolerance to those herbicides. Bayer is motivated to 
pursue trait research in part because successful commercialization of a 
trait will generate additional returns through the sale of the 
associated herbicide, and vice versa. Therefore, Section IV of the 
proposed Final Judgment also requires Bayer to divest its R&D projects 
relating to ketoenole and N,O-chelator (``NOC'') herbicides. These 
herbicides, if successful, would be sold in conjunction with the 
ketoenole- and NOC-tolerant traits Bayer is developing, which also are 
being divested. By requiring divestiture of both the trait projects and 
the associated herbicide projects, the proposed Final Judgment 
preserves BASF's incentive to pursue these innovations.
    The proposed Final Judgment also provides BASF full access to 
Bayer's Balance Bean herbicide. Bayer recently introduced BalanceGT 
soybeans, which contain a GM trait conveying tolerance to both 
glyphosate and isoxaflutole, a selective herbicide contained in Bayer's 
Balance Bean product. BalanceGT soybeans are poised to compete with 
Monsanto's herbicide-tolerant soybeans, but Balance Bean is not yet 
approved for spraying over the top of crops. The proposed Final 
Judgment requires Bayer to transfer intellectual property associated 
with its Balance Bean herbicide business to BASF; Paragraph IV.G gives 
BASF the option of entering a temporary isoxaflutole supply agreement 
with Bayer; and Paragraph IV.L commits Bayer to using best efforts to 
obtain the remaining regulatory approvals for use of isoxaflutole over 
the top of crops. These requirements ensure that BASF will have the 
same ability to offer farmers the combination of both the BalanceGT 
trait and the Balance Bean herbicide as Bayer would have if the merger 
had not occurred.

D. Seed Treatments

    Section IV of the proposed Final Judgment also requires Bayer to 
divest assets relating to its seed treatment businesses. Collectively, 
these divestitures remedy the likely anticompetitive effects of the 
merger that would arise both from the horizontal combination of Bayer's 
and Monsanto's nematicidal seed treatments, as well as from the 
vertical integration of Bayer's dominant seed treatments and Monsanto's 
dominant seed businesses.
    First, the proposed Final Judgment requires Bayer to divest all 
intellectual property associated with its Poncho, VOTiVO, and TWO.0 
seed treatment brands. The Complaint alleges that the merged firm could 
use its control over Poncho, which is uniquely effective against corn 
rootworm, to disadvantage its corn seed rivals and diminish competition 
in the GM corn seed market. VOTiVO is an important nematicidal seed 
treatment for corn, soy, and cotton, and in combination with other 
divestitures described below, its divestiture to BASF remedies the 
merger's likely harm in the market for nematicidal seed treatments. 
Because VOTiVO and TWO.0 are each typically sold in combination with 
Poncho, divestiture of the intellectual property associated with all 
three products will allow BASF to offer American farmers the same 
packages of Poncho-branded seed treatments as Bayer does today.
    The proposed Final Judgment also requires Bayer to divest 
intellectual property associated with its ILeVO and COPeO seed 
treatments, which are both based on the same active ingredient, 
fluopyram. ILeVO and COPeO protect soybeans and cotton seeds, 
respectively, from nematodes; ILeVO is also the first seed treatment to 
combat soybean SDS effectively. The ILeVO and COPeO divestitures, in 
combination with the divestiture of VOTiVO, will address the merger's 
likely harm in the markets for nematicidal seed treatments. The 
divestiture of ILeVO will also prevent Bayer from using its control 
over ILeVO to disadvantage Monsanto's soybean seed rivals and diminish 
competition in the market for GM soybean seeds, as alleged in the 
Complaint.
    Bayer also will transfer all intellectual property used by these 
divested seed treatment businesses, including all patents, licenses, 
know-how, trade names, and data or information collected on the 
products. The only exception is patents related to fluopyram, which 
Bayer primarily uses in other non-seed treatment products, such as 
fungicides applied to foliage. Therefore, the proposed Final Judgment 
requires Bayer to provide BASF with a perpetual, royalty-free license 
for all patents related to the use of fluopyram in seed treatments. The 
proposed Final Judgment also requires Bayer to divest all R&D projects 
associated with these seed treatment products, as well as a

[[Page 27677]]

product in development that would expand and improve on these existing 
seed treatment businesses.
    Paragraph IV.G of the proposed Final Judgment requires Bayer, at 
BASF's option, to toll manufacture the active ingredients used in the 
divested seed treatments for an initial period of up to two years, and 
to provide formulation and distribution services for the seed 
treatments for up to two years. With prior approval of the United 
States, certain of these arrangements may be extended for up to an 
additional four years. These agreements ensure that BASF can 
immediately replace Bayer as an effective competitor with the divested 
seed treatments. BASF has its own existing seed treatment businesses 
and will use the time under the agreements to prepare its own 
facilities to manufacture and distribute the seed treatments, or to 
arrange for other suppliers to do so.

E. Digital Agriculture

    Section IV of the proposed Final Judgment also requires Bayer to 
divest its digital agriculture business to BASF. Currently, the leading 
global agricultural businesses project that the industry will move 
toward ``integrated solutions,'' which are combinations of traditional 
agricultural input products that are optimized for use with one another 
or combined with other services. These companies have described digital 
agriculture as the ``glue'' that binds the products together and the 
core of any future integrated solution. This trend has led them to 
develop digital agriculture products to protect their position in 
traditional agricultural markets, including GM seed markets. To provide 
BASF with the digital agriculture capabilities needed to replace Bayer 
as a competitor going forward, the proposed Final Judgment requires 
Bayer to divest all assets related to its digital agriculture portfolio 
and pipeline of products.

F. Vegetables

    Finally, Section IV of the proposed Final Judgment requires Bayer 
to divest a comprehensive set of tangible and intangible assets 
representing Bayer's entire global vegetable seed business. Bayer's 
vegetable seed business operates under the Nunhems brand name, a 
business acquired by Bayer in 2002.
    The assets to be divested include all of Bayer's vegetable seed 
breeding capabilities, which encompass 24 different crops (including 
tomatoes, onions, carrots, cucumbers, and watermelons, among others) 
and approximately 2,400 varieties. Additional assets to be divested 
include Bayer's worldwide headquarters in Nunhem, Netherlands, and all 
global R&D facilities, sales offices, and operations centers. This will 
provide BASF with the necessary assets and infrastructure to continue 
vigorously competing, innovating, and developing new vegetable 
varieties. All customer information, including lists, accounts, and 
credit records will also be transferred to ensure that existing 
customers receive uninterrupted service.
    Bayer also will divest intangible assets currently used by the 
vegetable seed business. Critically, all intellectual property--
including patents, licenses, and copyrights--will be transferred to 
BASF. In addition, BASF will receive research data relating to historic 
and current R&D efforts. These divestitures will allow BASF to develop 
new and innovative vegetable seeds for current and future customers.

G. Employees

    As part of the divestitures, over four thousand Bayer employees who 
currently support the various divestiture businesses will become BASF 
employees. These employees will immediately bring critical business 
experience to BASF. As an added safeguard, Paragraph IV.E of the 
proposed Final Judgment provides BASF the right to hire additional 
personnel to ensure that BASF can become as effective a competitor and 
innovator as Bayer is today in each of the relevant markets. Bayer is 
required to make information available to BASF about the employees 
supporting the businesses and assets to be divested, subject to 
applicable privacy and confidentiality protections. BASF then will have 
the right to make offers of employment to these individuals. To ensure 
that BASF will have the ability to hire experienced personnel, the 
proposed Final Judgment prohibits Bayer from interfering with BASF's 
efforts to hire any Bayer or Monsanto employees with relevant 
expertise.

H. Monitoring Trustee

    Section VIII of the proposed Final Judgment provides the United 
States the option to seek the appointment of a Monitoring Trustee 
subject to the Court's approval. The United States intends to recommend 
a trustee for the Court's approval. The person selected will have the 
necessary expertise and experience to ensure that competition continues 
unabated across the various markets. Given the scope of the required 
divestitures, it is critical that the trustee be in a position to 
review and resolve any issues that may arise beginning immediately 
after the divestitures are completed.
    The Monitoring Trustee will ensure: (1) that Defendants 
expeditiously comply with all of their obligations and perform all of 
their responsibilities under the proposed Final Judgment and the 
Stipulation and Order, (2) that the Divestiture Assets remain 
economically viable, competitive, and ongoing businesses prior to being 
fully divested to BASF, and (3) that competition in the relevant 
businesses is maintained throughout the United States. The Monitoring 
Trustee will have the power and authority to monitor the Defendants' 
compliance with the terms of the proposed Final Judgment. The 
Monitoring Trustee also will have the authority to investigate 
complaints relating to Bayer and Monsanto's compliance with the 
proposed Final Judgment including, but not limited to, any complaints 
relating to the agreements Bayer and Monsanto have or will enter into 
with BASF. The Monitoring Trustee will have access to all personnel, 
books, records, and information necessary to monitor Defendants' 
compliance with the proposed Final Judgment, and will serve at the cost 
and expense of Bayer.
    The Monitoring Trustee will file reports every 30 days with the 
United States and, as appropriate, the Court until the completion of 
the required divestitures. The reports will set forth the efforts by 
Bayer and Monsanto to comply with their obligations under the proposed 
Final Judgment and the Stipulation and Order. After completion of the 
divestitures, the Monitoring Trustee will provide reports as requested 
by the United States.

I. Firewall

    Section IX of the proposed Final Judgment requires Bayer and BASF 
to implement firewall procedures to prevent each company's confidential 
business information from being used by the other for any purpose that 
could harm competition. Within twenty days of the Court approving the 
Stipulation and Order, Bayer and Monsanto must submit their planned 
procedures for maintaining firewalls. Additionally, Bayer and BASF must 
explain the requirements of the firewalls to certain officers and other 
business personnel responsible for the commercial relationships between 
the two companies about the required treatment of confidential business 
information. Bayer's and BASF's adherence to these procedures is 
subject to a semi-annual audit by the Monitoring Trustee. These 
measures are necessary to ensure that the supply and transition 
services

[[Page 27678]]

agreements between Bayer and BASF do not facilitate coordination or 
other anticompetitive behavior during the interim period before BASF 
becomes fully independent of Bayer.

J. Prohibition on Recombinations

    To ensure that BASF and Bayer remain independent competitors, 
Section XI of the proposed Final Judgment prohibits Bayer and BASF from 
recombining any of the Divestiture Assets with competing Bayer 
businesses. First, Bayer is prohibited from reacquiring any of the 
Divestiture Assets during the term of the Final Judgment. Second, BASF 
may not acquire from Bayer any assets or businesses that compete with 
the Divestiture Assets. These provisions ensure that Bayer and BASF 
cannot undermine the purpose of the proposed Final Judgment by later 
entering into a new transaction that would reduce the competition that 
the divestitures have preserved. Finally, Section XI prohibits Bayer 
and BASF from entering into any new collaboration, such as a research 
and development joint venture, or from expanding the scope of any 
existing collaboration, involving the Divestiture Assets. This 
provision prevents Bayer and BASF from circumventing the purpose of the 
proposed Final Judgment by, for example, entering into a partnership to 
jointly develop new traits, which could reduce or eliminate BASF's 
incentive to innovate independently in some or all of the relevant 
markets. The provision permits BASF and Bayer to engage in certain 
ordinary-course-of-business commercial relationships, such as crop 
protection product supply agreements. They also may engage in other 
collaborations if approved by the United States in its sole discretion.

K. Enforcement Provisions

    The proposed Final Judgment contains provisions designed to promote 
compliance and make the enforcement of consent decrees as effective as 
possible. As set forth in the Stipulation and Order, BASF has agreed to 
be joined to this action for purposes of the divestiture. Including 
BASF is appropriate because, after extensive analysis, the United 
States has determined that BASF is a necessary party to effectuate 
complete relief; the divestiture package was crafted specifically 
taking into consideration BASF's existing assets and capabilities, and 
divesting the package to another purchaser would not preserve 
competition. Thus, as discussed above, the proposed Final Judgment 
imposes certain obligations on BASF to ensure that the divestitures 
take place expeditiously and that BASF and Bayer reduce entanglements 
as quickly as possible after BASF acquires the Divestiture Assets.
    Paragraph XIV.A provides that the United States retains and 
reserves all rights to enforce the provisions of the proposed Final 
Judgment, including rights to seek an order of contempt from the Court. 
Under the terms of this Paragraph, all Defendants, including BASF, have 
agreed that in any civil contempt action, any motion to show cause, or 
any other similar action brought by the United States regarding an 
alleged violation of the Final Judgment, the United States may 
establish the violation and the appropriateness of any remedy by a 
preponderance of the evidence, and that the Defendants have waived any 
argument that a different standard of proof should apply. This 
provision aligns the standard for compliance obligations with the 
standard of proof that applies to the underlying offense that the 
compliance commitments address.
    Paragraph XIV.B provides additional clarification regarding the 
interpretation of the provisions of the proposed Final Judgment. The 
proposed Final Judgment was drafted to restore all competition that 
would otherwise be harmed by the merger. The Defendants agree that they 
will abide by the proposed Final Judgment, and that they may be held in 
contempt of this Court for failing to comply with any provision of the 
proposed Final Judgment that is stated specifically and in reasonable 
detail, as interpreted in light of this procompetitive purpose.
    Paragraph XIV.C of the proposed Final Judgment further provides 
that should the Court find in an enforcement proceeding that the 
Defendants have violated the Final Judgment, the United States may 
apply to the Court for a one-time extension of the Final Judgment, 
together with such other relief as may be appropriate. In addition, in 
order to compensate American taxpayers for any costs associated with 
the investigation and enforcement of violations of the proposed Final 
Judgment, Paragraph XIV.C provides that in any successful effort by the 
United States to enforce this Final Judgment against a Defendant, 
whether litigated or resolved prior to litigation, that Defendant 
agrees to reimburse the United States for attorneys' fees, experts' 
fees, or costs incurred in connection with any enforcement effort, 
including the investigation of the potential violation.
    Finally, Section XV of the proposed Final Judgment provides that 
the Final Judgment will expire ten years from the date of its entry, 
except that after six (6) years from the date of its entry, the Final 
Judgment may be terminated upon notice by the United States to the 
Court and Defendants that the divestitures have been completed and that 
the continuation of the Final Judgment is no longer necessary or in the 
public interest.

L. Stipulation and Order

    Bayer, Monsanto, and BASF have entered into the Stipulation and 
Order, which was filed with the Court at the same time as the 
Complaint, to ensure that, pending the divestitures, the Divestiture 
Assets are maintained such that the divestitures will be effective. The 
Stipulation and Order also requires Bayer to hold Monsanto as a 
separate entity until the divestitures are complete, so that the merger 
can be unwound if Bayer fails to complete the required divestitures to 
BASF. This step is necessary in this case because the divestiture 
package was crafted specifically taking into consideration BASF's 
existing assets and capabilities, and if BASF is unable to acquire the 
assets, simply divesting the package to another purchaser would not 
preserve competition. The Stipulation and Order also binds all three 
defendants to the terms of the proposed Final Judgment pending the 
Judgment's entry by the Court.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    Section 4 of the Clayton Act, 15 U.S.C. Sec.  15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damages action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
Sec.  16(a), the proposed Final Judgment has no prima facie effect in 
any subsequent lawsuit that may be brought against Defendants.

V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT

    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.

[[Page 27679]]

    The APPA provides a period of at least 60 days preceding the 
effective date of the proposed Final Judgment within which any person 
may submit to the United States written comments regarding the proposed 
Final Judgment. Any person who wishes to comment should do so within 60 
days of the date of publication of this Competitive Impact Statement in 
the Federal Register, or the last date of publication in a newspaper of 
the summary of this Competitive Impact Statement, whichever is later. 
All comments received during this period will be considered by the 
United States, which remains free to withdraw its consent to the 
proposed Final Judgment at any time prior to the Court's entry of 
judgment. The comments and the response of the United States will be 
filed with the Court. In addition, comments will be posted on the 
Antitrust Division's internet website and, in certain circumstances, 
published in the Federal Register.
    Written comments should be submitted by mail to:

Kathleen S. O'Neill
Chief, Transportation, Energy & Agriculture Section
Antitrust Division
United States Department of Justice
450 5th Street, NW, Suite 8000
Washington, DC 20530

    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any necessary or appropriate modification, interpretation, or 
enforcement of the Final Judgment.

VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT

    The United States considered, as an alternative to the proposed 
Final Judgment, seeking preliminary and permanent injunctions against 
the merger and proceeding to a full trial on the merits. The United 
States is satisfied, however, that the relief in the proposed Final 
Judgment will preserve competition in each relevant market in the 
United States. Thus, the proposed Final Judgment will protect 
competition as effectively as, and will achieve all or substantially 
all of the relief the United States would have obtained through, 
litigation, but avoids the time, expense, and uncertainty of a full 
trial on the merits.

VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a 60-day comment period, after which the court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. Sec.  16(e)(1). In making such a 
determination, the court, in accordance with the statute as amended in 
2004, is required to consider:

(A) the competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative 
remedies actually considered, whether its terms are ambiguous, and 
any other competitive considerations bearing upon the adequacy of 
such judgment that the court deems necessary to a determination of 
whether the consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.

15 U.S.C. Sec.  16(e)(1)(A) & (B). In considering these statutory 
factors, the court's inquiry is necessarily a limited one as the 
government is entitled to ``broad discretion to settle with the 
defendant within the reaches of the public interest.'' United States v. 
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally 
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1, 15-17 (D.D.C. 
2007) (assessing public interest standard under the Tunney Act); United 
States v. U.S. Airways Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) 
(explaining that the ``court's inquiry is limited'' in Tunney Act 
settlements); United States v. InBev N.V./S.A., No. 08-1965 (JR), 2009-
2 Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, at *3, 
(D.D.C. Aug. 11, 2009) (noting that the court's review of a consent 
judgment is limited and only inquires ``into whether the government's 
determination that the proposed remedies will cure the antitrust 
violations alleged in the complaint was reasonable, and whether the 
mechanisms to enforce the final judgment are clear and 
manageable'').\2\
---------------------------------------------------------------------------

    \2\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for courts to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
Sec.  16(e) (2004), with 15 U.S.C. Sec.  16(e)(1) (2006); see also 
SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004 
amendments ``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA a court considers, among other things, 
the relationship between the remedy secured and the specific 
allegations set forth in the government's complaint, whether the decree 
is sufficiently clear, whether enforcement mechanisms are sufficient, 
and whether the decree may positively harm third parties. See 
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the 
relief secured by the decree, a court may not ``engage in an 
unrestricted evaluation of what relief would best serve the public.'' 
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (quoting 
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see 
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, 
at *3. Courts have held that:

[t]he balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\3\ In 
determining whether a proposed settlement is in the public interest, a 
court ``must accord deference to the government's predictions about the 
efficacy of its remedies, and may not require that the remedies 
perfectly match the alleged violations.'' SBC Commc'ns, 489 F. Supp. 2d 
at 17; see also U.S. Airways, 38 F. Supp. 3d at 75 (noting that a court 
should not reject the proposed remedies because it believes others are 
preferable); Microsoft, 56 F.3d at 1461 (noting the need for courts to 
be ``deferential to the government's predictions as to the effect of 
the proposed remedies''); United States v. Archer-Daniels-Midland Co., 
272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court should grant 
due respect to the United States' prediction as to the effect

[[Page 27680]]

of proposed remedies, its perception of the market structure, and its 
views of the nature of the case).
---------------------------------------------------------------------------

    \3\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest' '').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.''' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also U.S. 
Airways, 38 F. Supp. 3d at 76 (noting that room must be made for the 
government to grant concessions in the negotiation process for 
settlements (citing Microsoft, 56 F.3d at 1461)); United States v. 
Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving 
the consent decree even though the court would have imposed a greater 
remedy). To meet this standard, the United States ``need only provide a 
factual basis for concluding that the settlements are reasonably 
adequate remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp. 
2d at 17.
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways, 
38 F. Supp. 3d at 75 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``[T]he 
`public interest' is not to be measured by comparing the violations 
alleged in the complaint against those the court believes could have, 
or even should have, been alleged.''). Because the ``court's authority 
to review the decree depends entirely on the government's exercising 
its prosecutorial discretion by bringing a case in the first place,'' 
it follows that ``the court is only authorized to review the decree 
itself,'' and not to ``effectively redraft the complaint'' to inquire 
into other matters that the United States did not pursue. Microsoft, 56 
F.3d at 1459-60. As a court in this district confirmed in SBC 
Communications, courts ``cannot look beyond the complaint in making the 
public interest determination unless the complaint is drafted so 
narrowly as to make a mockery of judicial power.'' 489 F. Supp. 2d at 
15.
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of utilizing consent decrees in antitrust 
enforcement, adding the unambiguous instruction that ``[n]othing in 
this section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. Sec.  16(e)(2); see also U.S. Airways, 38 F. 
Supp. 3d at 76 (indicating that a court is not required to hold an 
evidentiary hearing or to permit intervenors as part of its review 
under the Tunney Act). The language wrote into the statute what 
Congress intended when it enacted the Tunney Act in 1974, as Senator 
Tunney explained: ``[t]he court is nowhere compelled to go to trial or 
to engage in extended proceedings which might have the effect of 
vitiating the benefits of prompt and less costly settlement through the 
consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of 
Sen. Tunney). Rather, the procedure for the public interest 
determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11.\4\ A court can make its public 
interest determination based on the competitive impact statement and 
response to public comments alone. U.S. Airways, 38 F. Supp. 3d at 76.
---------------------------------------------------------------------------

    \4\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1 
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D. Mo. 1977) (``Absent 
a showing of corrupt failure of the government to discharge its 
duty, the Court, in making its public interest finding, should . . . 
carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, at 6 (1973) (``Where the 
public interest can be meaningfully evaluated simply on the basis of 
briefs and oral arguments, that is the approach that should be 
utilized.'').
---------------------------------------------------------------------------

VIII. DETERMINATIVE DOCUMENTS

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

    Dated: May 29, 2018

Respectfully Submitted,

Scott I. Fitzgerald
Robert A. Lepore
Katherine A. Celeste
Jeremy Evans (D.C. Bar #478097)

Attorneys for the United States

U.S. Department of Justice
Antitrust Division
450 5th Street, NW, Suite 8000
Washington, DC 20530
Tel.: (202) 353-3863
Fax: (202) 616-2441
E-mail: [email protected]

[FR Doc. 2018-12202 Filed 6-12-18; 8:45 am]
 BILLING CODE 4410-11-P



                                              27652                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                              DEPARTMENT OF JUSTICE                                   COMPLAINT                                              seeds with new genetically modified
                                                                                                        The United States of America, acting                 traits, as well as other innovative
                                              Antitrust Division                                                                                             products that improve yields for
                                                                                                      under the direction of the Attorney
                                                                                                      General of the United States, brings this              farmers. This competition is central to
                                              United States of America v. Bayer AG                                                                           their businesses. Monsanto’s chief
                                              and Monsanto Company; Proposed                          civil antitrust action to prevent Bayer
                                                                                                      AG from acquiring Monsanto Company.                    technology officer has said that
                                              Final Judgment and Competitive                                                                                 innovation is ‘‘the heart and soul of who
                                              Impact Statement                                        The United States alleges as follows:
                                                                                                                                                             we are.’’ Similarly, Bayer’s core strategy
                                                                                                      I. INTRODUCTION                                        is to become the ‘‘most innovative’’
                                                 Notice is hereby given pursuant to the                                                                      agricultural company in the world. Both
                                              Antitrust Procedures and Penalties Act,                    1. Bayer’s proposed $66 billion
                                                                                                      acquisition of its rival, Monsanto, would              companies invest significant sums of
                                              15 U.S.C. § 16(b)–(h), that a proposed                                                                         money into research and development
                                              Final Judgment, Stipulation and Order,                  combine two of the largest agricultural
                                                                                                      companies in the world. Across the                     and monitor each other’s efforts,
                                              and Competitive Impact Statement have                                                                          spurring each other to work faster and
                                              been filed with the United States                       globe, Bayer and Monsanto compete to
                                                                                                      sell seeds and chemicals that farmers                  invest more to improve their offerings
                                              District Court for the District of                                                                             and develop new products. For
                                              Columbia in United States of America v.                 use to grow their crops. This
                                                                                                      competition has bolstered an American                  instance, Monsanto recently developed
                                              Bayer AG and Monsanto Company,                                                                                 a seed treatment product that protects
                                              Civil Action No. 1:18–cv–1241. On May                   farming industry that contributes
                                                                                                      hundreds of billions of dollars a year to              crops from destructive worms called
                                              29, 2018, the United States filed a                                                                            nematodes, directly challenging Bayer’s
                                              Complaint alleging that Bayer AG’s                      the economy, provides millions of jobs
                                                                                                                                                             historic dominance in that space. The
                                              proposed acquisition of Monsanto                        across the country, and ensures a safe
                                                                                                                                                             proposed acquisition would eliminate
                                              Company would violate Section 7 of the                  and reliable food supply for consumers
                                                                                                                                                             this competition to develop new
                                              Clayton Act, 15 U.S.C. § 18. The                        in the United States and around the
                                                                                                                                                             products that farmers will depend on for
                                              proposed Final Judgment, filed at the                   world.
                                                                                                                                                             decades into the future.
                                              same time as the Complaint, requires                       2. If allowed to proceed, the proposed                 5. The merger would also
                                              Bayer AG to divest a substantial                        acquisition would transform the                        substantially lessen competition
                                              collection of assets relating to seeds and              agricultural industry and harm                         through the vertical integration of the
                                              traits, crop protection, and digital                    competition across a broad range of                    two companies. Specifically, by
                                              agriculture.                                            products. Most prominently, the                        combining Monsanto’s strong position
                                                                                                      acquisition would eliminate                            in seeds with Bayer’s dominant position
                                                 Copies of the Complaint, proposed                    competition to develop and sell
                                              Final Judgment, and Competitive Impact                                                                         in certain seed treatments, the merger
                                                                                                      genetically modified seeds in cotton,                  would give the combined company the
                                              Statement are available for inspection                  canola, and soybeans—three of the
                                              on the Antitrust Division’s website at                                                                         incentive and ability to harm its seed
                                                                                                      largest crops grown in the United                      rivals by raising the price of those seed
                                              http://www.justice.gov/atr and at the                   States—and the herbicides that are
                                              Office of the Clerk of the United States                                                                       treatments—a key input for genetically
                                                                                                      paired with these seeds to form the                    modified seeds. For example, today,
                                              District Court for the District of                      foundation of farmers’ weed-control
                                              Columbia. Copies of these materials may                                                                        Bayer sells the only seed treatment that
                                                                                                      strategies.                                            effectively controls a destructive pest
                                              be obtained from the Antitrust Division                    3. These agricultural technologies
                                              upon request and payment of the                                                                                called corn rootworm. Because Bayer
                                                                                                      emerged in the 1990s when Monsanto                     does not sell corn seeds itself, it has a
                                              copying fee set by Department of Justice                introduced ‘‘Roundup Ready’’ soybeans,
                                              regulations.                                                                                                   strong incentive to sell that seed
                                                                                                      which were genetically engineered to                   treatment to all corn seed companies,
                                                 Public comment is invited within 60                  resist Monsanto’s herbicide, Roundup.                  including Monsanto’s rivals. But the
                                              days of the date of this notice. Such                   Monsanto’s invention allowed farmers                   merger would change the calculus for
                                              comments, including the name of the                     who planted Roundup Ready soybeans                     Bayer because it would now own
                                              submitter, and responses thereto, will be               to spray Roundup over the top of their                 Monsanto, the largest supplier of corn
                                              posted on the Antitrust Division’s                      crops, thereby killing the weeds without               seeds in the United States. Armed with
                                              website, filed with the Court, and, under               harming the crops. It was a wildly                     Monsanto’s strong position in corn
                                              certain circumstances, published in the                 popular invention; by 2005, almost 90%                 seeds, the merged company would
                                              Federal Register. Comments should be                    of U.S. soybean acres were planted with                likely charge its seed rivals more for the
                                              mailed to Kathleen S. O’Neill, Chief,                   Roundup Ready seeds. In response, in                   seed treatment, knowing that they rely
                                              Transportation, Energy & Agriculture                    2009, Bayer launched its own                           on the product and would be less able
                                              Section, Antitrust Division, Department                 ‘‘LibertyLink’’ genetically modified                   to compete effectively without it.
                                              of Justice, 450 5th Street NW, Suite                    soybeans, which were engineered to                        6. Finally, the merger would eliminate
                                              8000, Washington, DC 20530.                             withstand Bayer’s Liberty herbicide.                   head-to-head competition between
                                                                                                      Both companies have introduced similar                 Bayer and Monsanto to develop and sell
                                              Patricia A. Brink,
                                                                                                      innovations in cotton and canola,                      seeds for five types of vegetables:
                                              Director of Civil Enforcement.
                                                                                                      generating competition that has resulted               tomatoes, carrots, cucumbers, onions,
                                              UNITED STATES DISTRICT COURT                            in higher crop yields, lower prices, and               and watermelons. Although vegetable
                                              FOR THE DISTRICT OF COLUMBIA                            greater choice for American farmers.                   seeds are not genetically modified like
                                                                                                      Today, Bayer’s weed-control systems are                cotton, canola, and soybeans, Bayer and
amozie on DSK3GDR082PROD with NOTICES2




                                                 United States of America, 450 5th Street
                                              NW, Suite 8000, Washington, DC 20530,                   the only competitive alternatives to                   Monsanto compete aggressively with
                                              Plaintiff, v. Bayer AG, Kaiser-Wilhelm-Allee            Monsanto’s Roundup Ready systems in                    one another to breed higher-quality and
                                              1, Leverkusen, Germany 51368, and                       cotton, canola, and soybeans.                          higher-yielding varieties.
                                              Monsanto Company, 800 North Lindbergh                      4. Bayer and Monsanto also compete                     7. By eliminating competition
                                              Boulevard, St. Louis, MO 63167, Defendants.             head-to-head to develop the next                       between Bayer and Monsanto and
                                              Civil Action No.: 1:18–cv–1241                          generation of transformative products,                 combining their businesses, the
                                              Judge James E. Boasberg                                 including cotton, canola, and soybean                  proposed acquisition would result in


                                         VerDate Sep<11>2014   18:05 Jun 12, 2018   Jkt 244001   PO 00000   Frm 00002   Fmt 4701   Sfmt 4703   E:\FR\FM\13JNN2.SGM   13JNN2


                                                                           Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices                                             27653

                                              higher prices, less innovation, fewer                   IV. RELEVANT MARKETS                                   soybeans, the market structure differs
                                              choices, and lower-quality products for                    14. As noted, Bayer and Monsanto                    across regions; thus, the relevant
                                              farmers and consumers throughout the                    compete across a broad range of                        geographic market is the southern
                                              United States and around the world. To                  agricultural products, including                       United States, where Bayer has focused
                                              prevent those harms, this unlawful                      genetically modified (GM) seeds and                    its soybean breeding program and been
                                              acquisition should be enjoined.                         traits for row crops; crop protection                  particularly successful.
                                                                                                                                                                17. For the relevant crop protection
                                              II. DEFENDANTS AND THE                                  products, such as herbicides and seed
                                                                                                                                                             products (foundational herbicides and
                                              TRANSACTION                                             treatments; and vegetable seeds. The
                                                                                                                                                             nematicidal seed treatments), the
                                                 8. Bayer is a life-sciences company                  proposed acquisition would
                                                                                                                                                             geographic markets are national. Bayer
                                              based in Leverkusen, Germany. The                       substantially lessen competition in the
                                                                                                                                                             and Monsanto sell these products
                                              company employs nearly 100,000                          following 17 products:                                 throughout the United States. In
                                              people worldwide and has operations in                  Bayer–Monsanto: Relevant Products                      addition, these products require U.S.
                                              almost 80 countries. Bayer has three                                                                           regulatory approval, which is expensive
                                                                                                      GM Seeds and Traits
                                              main business lines: pharmaceuticals,                                                                          and time-consuming, so competition is
                                                                                                      Cotton:
                                              which focuses on prescription                                                                                  limited to products that have obtained
                                                                                                         • Herbicide-tolerant traits
                                              medicines; consumer health, which                          • Insect-resistant traits                           the necessary approvals. Similar
                                              focuses on over-the-counter products;                      • GM cotton seeds                                   products sold in other countries but not
                                              and its agricultural business, Bayer Crop               Canola:                                                approved for use in the United States
                                              Science. Over the past decade, Bayer                       • Herbicide-tolerant traits                         are not reasonable substitutes for
                                              Crop Science has become one of the                         • GM canola seeds                                   American farmers.
                                              largest global agricultural companies.                  Soybeans:                                                 18. For these reasons, in each of the
                                              Today, its crop protection business is                     • Herbicide-tolerant traits                         relevant geographic markets for seeds
                                              the second largest in the world, and its                   • GM soybeans                                       and crop protection products, a
                                              seeds and traits business is also among                 Corn:                                                  hypothetical monopolist likely would
                                              the world’s largest. In 2016, Bayer Crop                   • GM corn seeds                                     impose at least a small but significant
                                              Science had about $12 billion in annual                                                                        and non-transitory increase in price.
                                                                                                      Crop Protection
                                              revenues.                                                                                                         19. Most of the relevant markets are
                                                                                                      Foundational herbicides
                                                 9. Monsanto, based in St. Louis,                                                                            already highly concentrated, and in
                                                                                                      Nematicidal seed treatments:
                                              Missouri, is also a leading producer of                                                                        each market the merger would
                                                                                                         • Corn
                                              agricultural products. Monsanto                                                                                significantly increase concentration.
                                                                                                         • Soybeans
                                              employs more than 20,000 people in                                                                             The more concentrated a market and the
                                                                                                         • Cotton
                                              almost 70 countries. As noted, in the                                                                          more a transaction increases
                                                                                                      Vegetables                                             concentration in that market, the more
                                              1990s, Monsanto pioneered a
                                                                                                         • Carrot seeds                                      likely it is that the transaction will
                                              revolutionary technology that enables
                                                                                                         • Cucumber seeds                                    reduce competition. Concentration is
                                              certain crops to resist exposure to                        • Onion seeds
                                              glyphosate, the active ingredient in                                                                           typically measured by market shares
                                                                                                         • Tomato seeds                                      and by the widely-used Herfindahl-
                                              Monsanto’s Roundup herbicide. This                         • Watermelon seeds
                                              technology propelled Monsanto’s                                                                                Hirschman Index (HHI). If the post-
                                              success: today, Monsanto is the leading                    15. Each of these products is a                     transaction HHI would be more than
                                              global producer of seeds and traits and                 relevant product and line of commerce                  2,500 and the change in HHI more than
                                              is among the world’s largest producers                  under Section 7 of the Clayton Act, 15                 200, the transaction is presumed to
                                              of crop protection products. In 2017,                   U.S.C. § 18. The industry views these                  enhance market power and substantially
                                              Monsanto had almost $15 billion in                      products as separate business lines, and               lessen competition. See, e.g., United
                                              annual revenues.                                        they satisfy the well-accepted                         States v. Anthem, Inc., 855 F.3d 345,
                                                 10. On September 14, 2016, Bayer                     hypothetical monopolist test in the U.S.               349 (D.C. Cir. 2017). Given the high
                                              agreed to acquire Monsanto for                          Department of Justice and Federal Trade                concentration levels and increases in
                                              approximately $66 billion.                              Commission Horizontal Merger                           concentration in the relevant markets in
                                                                                                      Guidelines, which asks whether a                       this case, the proposed acquisition
                                              III. JURISDICTION AND VENUE                             hypothetical monopolist likely would                   presumptively violates Section 7 of the
                                                 11. The United States brings this                    impose at least a small but significant                Clayton Act.
                                              action, and the Court has subject-matter                and non-transitory increase in price.
                                                                                                      Such a price increase for these products               A. Genetically Modified Seeds and
                                              jurisdiction, under Section 15 of the
                                                                                                      would not be defeated by substitution to               Traits
                                              Clayton Act, 15 U.S.C. § 25, to prevent
                                              and restrain Defendants from violating                  alternative products.                                     20. Several markets in this case
                                              Section 7 of the Clayton Act, 15 U.S.C.                    16. The relevant geographic markets                 involve genetically modified seeds and
                                              § 18.                                                   in this case vary by product. For seeds                traits. A genetic trait is simply an
                                                 12. Defendants are engaged in, and                   and traits generally, the markets are                  attribute of a plant, such as being tall,
                                              their activities substantially affect,                  regional because seeds are tailored to                 short, or leafy. Most traits derive from
                                              interstate commerce. Bayer and                          regional growing conditions (such as                   a plant’s natural DNA. Over the last 30
                                              Monsanto sell agricultural products,                    weather and soil type) and suppliers can               years, however, a small set of highly
                                              including seeds and crop protection                     charge different prices for seeds and                  sophisticated biotechnology firms—
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                                              products, throughout the United States                  traits to customers in different regions.              including Bayer and Monsanto—have
                                              and the world.                                          With the exception of soybeans,                        successfully inserted DNA from other
                                                 13. Defendants have consented to                     however, virtually all of the regions                  organisms into the DNA of certain
                                              venue and personal jurisdiction in this                 affected by the merger have a similar                  crops, giving the crops a desirable trait
                                              district. Venue is also proper under                    market structure, so in this case it is                associated with that non-native DNA.
                                              Section 12 of the Clayton Act, 15 U.S.C.                appropriate to aggregate them to a                     For example, scientists have developed
                                              § 22, and 28 U.S.C. § 1391.                             national level for convenience. For                    traits that make crops resistant to certain


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                                              27654                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                              pests, allowing farmers to reduce their                 leading suppliers of genetically                          28. GM canola seeds. In 2016,
                                              use of chemical insecticides. And                       modified cotton seeds throughout the                   genetically modified canola seeds
                                              scientists have developed herbicide-                    United States. In addition to owning                   accounted for $83 million in sales in the
                                              tolerant traits that make crops resistant               critical traits (discussed below), they                United States, and virtually all canola
                                              to herbicides like Roundup, allowing a                  own extensive libraries of elite seed                  seeds contain genetically modified
                                              farmer to spray the herbicide over an                   varieties, which are essential for                     traits. Bayer’s canola innovations in
                                              entire field and kill the weeds without                 developing and commercializing                         recent years have allowed it to surpass
                                              harming the crops. A genetically                        competitive cotton seeds. If the                       Monsanto. In 2016, Bayer’s share of
                                              modified seed is simply a seed that                     transaction is allowed to proceed, Bayer               genetically modified canola seeds in the
                                              contains DNA—and hence the desirable                    and Monsanto would have a combined                     United States was 60% and Monsanto’s
                                              trait—of a different organism. Farmers                  59% share of genetically modified                      share was 14%. The post-transaction
                                              have embraced this technology: today,                   cotton seeds in the United States. The                 HHI would be approximately 5,600,
                                              more than 90% of the corn, soybeans,                    post-transaction HHI would be                          with an increase of approximately
                                              cotton, and canola seeds grown in the                   approximately 4,100, with an increase                  1,700.
                                              United States are genetically modified.                 of approximately 1,500 resulting from                     29. Herbicide-tolerant traits. Bayer
                                              These seeds provide farmers with                        the transaction.                                       and Monsanto are even more dominant
                                              considerable savings in labor and                          25. Herbicide-tolerant traits. Given                in herbicide-tolerant traits for canola,
                                              expense, increased yields, and reduced                  the widespread adoption of genetically                 where they have a combined share of
                                              soil erosion by eliminating the need for                modified cotton seeds, herbicide-                      95%. Virtually all canola seeds planted
                                              tilling fields. Thus, a vast majority of                tolerant traits are now used on                        in the United States contain either
                                              farmers do not view conventional seeds                  approximately 98% of the cotton acres                  Bayer’s LibertyLink trait or Monsanto’s
                                              as a reasonable substitute.                             in the United States. In 2017, Bayer and               Roundup Ready trait. For these traits,
                                                 21. With the rise of genetically                     Monsanto accounted for virtually all of                the post-transaction HHI would be
                                              modified crops, it has also become                      those acres, with about 19% of acres                   approximately 9,200, with an increase
                                              harder for smaller companies, which                     containing Bayer’s traits and about 80%                of over 4,100.
                                              lack the massive resources necessary to                 containing Monsanto’s traits. The
                                                                                                                                                             (3) Genetically modified soybeans
                                              devote to research and development, to                  merger would thus give Bayer a
                                              compete in these high-tech markets. It                  monopoly in these markets: the post-                      30. After corn, soybeans are the
                                              typically takes hundreds of millions of                 transaction HHI would be                               largest crop grown in the United States.
                                              dollars and more than a decade to bring                 approximately 9,600, with an increase                  Soybeans are widely used in vegetable
                                              a genetically modified seed variety or a                of approximately 3,000. Bayer and                      oil, packaged foods, and animal feed. In
                                              new pesticide to market. A company                      Monsanto are also competing                            2017, U.S. farmers planted almost 90
                                              must also have access to an extensive                   aggressively to develop the next                       million acres of soybeans, accounting
                                              library of high-quality seeds that are                  generation of herbicide-tolerant cotton                for $4.6 billion in seed purchases, and
                                              necessary for research and plant                        traits. Farmers need these innovations to              94% of those acres contained herbicide-
                                              breeding. Today, such resources are                     combat the growing number of weeds,                    tolerant traits. The proposed acquisition
                                              increasingly controlled by four                         like pigweed, that have become                         would harm competition in the markets
                                              vertically integrated companies:                        increasingly resistant to glyphosate in                for (1) genetically modified soybeans
                                              Monsanto, Bayer, DowDuPont, and                         recent years. Without the merger, these                and (2) herbicide-tolerant traits for
                                              Syngenta, also known as the ‘‘Big Four.’’               new traits would likely compete in the                 soybeans.
                                              Although smaller independent seed                       future.                                                   31. GM soybeans. Since launching
                                              companies also sell genetically modified                   26. Insect-resistant traits. Bayer                  genetically modified soybeans in the
                                              seeds to farmers, most of those                         and Monsanto also compete for sales of                 1990s, Monsanto has been the market
                                              companies license traits and seed                       insect-resistant traits that protect cotton            leader. For years, Monsanto’s only
                                              varieties from Monsanto, limiting their                 from destructive pests such as moth and                competitors were companies that relied
                                              ability to compete.                                     bollworm larvae. In 2017, insect-                      on Monsanto for licenses to the
                                                 22. As described below, Bayer and                    resistant traits were used on                          Roundup Ready traits. Since 2009,
                                              Monsanto are close competitors in three                 approximately 88% of the cotton acres                  however, Bayer has emerged as a serious
                                              important row crops: cotton, canola, and                in the United States. Bayer and                        threat: it has invested over $250 million
                                              soybeans.                                               Monsanto accounted for approximately                   to develop an independent source of
                                                                                                      85% of those acres, with about 10% of                  soybean varieties and in 2014 launched
                                              (1) Genetically modified cotton                         acres containing Bayer’s traits and about              its own soybean business, Credenz,
                                                23. Cotton is a major crop grown                      75% containing Monsanto’s traits. The                  which sells varieties that perform well
                                              across the southern United States,                      post-transaction HHI would be                          in the southern United States. In 2017,
                                              particularly in states like Texas and                   approximately 7,400, with an increase                  Bayer had a 6% share of soybeans in
                                              Georgia. Cotton seeds are widely used in                of approximately 1,400.                                that region and Monsanto had a 39%
                                              vegetable oil, packaged foods, and                                                                             share. The post-transaction HHI in the
                                              animal feed, and cotton fibers are                      (2) Genetically modified canola                        southern United States would be
                                              widely used in clothing. In 2017, U.S.                    27. Canola is an important crop used                 approximately 2,800, with an increase
                                              farmers planted about 12 million acres                  in vegetable oil, packaged foods,                      of approximately 500.
                                              of cotton and sales of cotton seeds                     biodiesel fuels, and animal feed. In the                  32. Herbicide-tolerant traits. Bayer
                                              totaled over $800 million. For cotton,                  United States, canola is grown on                      and Monsanto also have the leading
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                                              the proposed acquisition would harm                     approximately 1.7 million acres, mainly                herbicide-tolerant traits for soybeans.
                                              competition in the markets for (1)                      in North Dakota, but also in several                   Monsanto’s Roundup Ready trait has
                                              genetically modified cotton seeds, (2)                  other states. The proposed merger                      historically dominated sales, but in
                                              herbicide-tolerant traits for cotton, and               would harm competition in the markets                  recent years Bayer’s LibertyLink trait
                                              (3) insect-resistant traits for cotton.                 for (1) genetically modified canola seeds              has made inroads. In 2017, Monsanto
                                                24. GM cotton seeds. Bayer and                        and (2) herbicide-tolerant traits for                  had a 67% share of U.S. sales and
                                              Monsanto have long been the two                         canola.                                                Bayer’s share had risen to 14%. (The


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                                                                           Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices                                             27655

                                              remaining market participants use a                     Thus, this market is already highly                    (1) Nematicidal seed treatments for
                                              post-patent version of the original                     concentrated and the merger would                      corn, cotton, and soybeans
                                              Roundup Ready trait.) For herbicide-                    result in a post-transaction HHI of
                                              tolerant traits, the post-transaction HHI               approximately 3,700, with an increase                     40. The merger would eliminate head-
                                              would be approximately 6,900 on a                       of over 650.                                           to-head competition for nematicidal
                                              national basis, with an increase of                                                                            seed treatments used on corn, cotton,
                                                                                                         36. Going forward, competition
                                              approximately 1,900. Without the                                                                               and soybeans. Nematicidal seed
                                                                                                      between Bayer and Monsanto to develop
                                              merger, competition between the two                                                                            treatments protect crops from parasitic
                                                                                                      next-generation weed-management
                                              companies would likely increase: Bayer                                                                         roundworms known as nematodes. For
                                                                                                      systems is likely to increase. According
                                              and Monsanto each have new traits in                                                                           corn, cotton, and soybean farmers, there
                                                                                                      to a Bayer strategy document, the
                                              their research pipelines that would                                                                            are no cost-effective alternatives to
                                                                                                      company’s number one ‘‘Must Win
                                              confer tolerance to additional herbicides                                                                      nematicidal seed treatments. And, in
                                                                                                      Battle’’ is to ‘‘[e]stablish LibertyLink as
                                              and compete in the future.                                                                                     part because seed treatments must be
                                                                                                      a foundation trait for broadacre [row]
                                                                                                                                                             registered on a crop-by-crop basis, the
                                              B. Foundational Herbicides                              crops and position Liberty herbicide as
                                                                                                                                                             treatments for each crop constitute a
                                                                                                      the superior weed management tool.’’
                                                 33. In addition to competing to sell                                                                        separate market.
                                                                                                      Bayer is also developing new non-
                                              herbicide-tolerant seeds, Bayer and                     selective herbicides for soybeans and                     41. All three nematicidal seed
                                              Monsanto also compete to sell the                       corn called N,O-Chelators (NOCs), along                treatment markets are highly
                                              foundational herbicides—glyphosate                      with traits conferring tolerance to NOCs.              concentrated. For years, Bayer has had
                                              and glufosinate—that are paired with                    If successful, NOCs would form the                     a monopoly in the market for
                                              these seeds.                                            basis of a new foundational herbicide                  nematicidal seed treatments for corn,
                                                 34. Foundational herbicides are                                                                             with over a 95% share in 2017. Bayer
                                                                                                      system that would rival Monsanto’s
                                              herbicides used on row crops that have                                                                         dominates the market for nematicidal
                                                                                                      Roundup Ready-based systems.
                                              two defining characteristics. First, they                                                                      seed treatments for soybeans, with a
                                              are ‘‘non-selective,’’ meaning that they                   37. Likewise, Monsanto is actively
                                                                                                      pursuing innovations in foundational                   share over 85%. And, in the market for
                                              kill all types of weeds, thus providing                                                                        nematicidal seed treatments for cotton,
                                              farmers with the broadest possible                      herbicides. For example, Monsanto is
                                                                                                      developing an improved formulation of                  Bayer and Syngenta currently share a
                                              protection for their crops. In contrast,                                                                       duopoly.
                                              other types of herbicides are ‘‘selective,’’            Roundup that is expected for release in
                                                                                                      2019. Bayer’s and Monsanto’s incentives                   42. Although Monsanto does not
                                              meaning that they kill only certain types
                                                                                                      to independently pursue these future                   currently sell in this market, it is poised
                                              of weeds. Selective herbicides are often
                                                                                                      products in close competition with each                to launch its first nematicidal seed
                                              used to supplement non-selective
                                                                                                      other would disappear post-merger.                     treatment, NemaStrike. NemaStrike is
                                              herbicides but are not generally used in
                                                                                                                                                             expected to challenge Bayer’s market
                                              lieu of them. Second, foundational                      C. Seed Treatments                                     position in nematicidal seed treatments
                                              herbicides can be paired with seeds that
                                                                                                         38. In addition to relying on                       in all three crops—corn, cotton, and
                                              are engineered to tolerate the herbicide.
                                                                                                      genetically modified seeds and                         soybeans. Both Bayer and Monsanto
                                              Other non-selective herbicides are not a
                                                                                                      herbicides, farmers also protect their                 project that NemaStrike will capture
                                              substitute for farmers because no seeds
                                                                                                      crops using seed treatments, which are                 significant market share from Bayer. By
                                              are engineered to withstand them, so
                                              spraying those herbicides over a crop                   coatings applied to seeds before they are              acquiring Monsanto, Bayer would thus
                                              would damage it. For these reasons,                     planted. Seed treatments are a critical                eliminate the most significant
                                              farmers have no good substitutes for                    tool for modern farmers, and today at                  competitive threat to its dominant
                                              foundational herbicides. Today,                         least one seed treatment is applied to                 position in these markets, to the
                                              glyphosate and glufosinate are the only                 the vast majority of genetically modified              detriment of farmers who rely on these
                                              two foundational herbicides, but, as                    seeds grown in the United States.                      important products to protect their
                                              discussed further below, new                            Multiple seed treatments can be applied                crops.
                                              foundational herbicides are in                          to a seed to protect it from various                   (2) Vertical foreclosure—insecticidal
                                              development.                                            threats; seed treatments designed for                  seed treatments for corn rootworm and
                                                 35. Bayer and Monsanto are the                       one purpose (such as killing insects) are              genetically modified corn seeds
                                              world’s leading producers of                            rarely an effective substitute for seed
                                              foundational herbicides. As noted                       treatments designed for a different                       43. The merger would also likely
                                              above, glyphosate was developed by                      purpose (such as controlling fungal                    harm competition in the market for
                                              Monsanto and is the active ingredient in                diseases).                                             genetically modified corn by combining
                                              Roundup; glufosinate was developed by                      39. The merger would likely result in               Monsanto’s strong position in
                                              Bayer and is the active ingredient in                   three forms of competitive harm related                genetically modified corn seeds with
                                              Liberty. Since the launch of genetically                to seed treatments: (1) the loss of head-              Bayer’s dominant position in
                                              modified crops in the 1990s, Monsanto’s                 to-head competition between Bayer’s                    insecticidal seed treatments for corn
                                              Roundup has dominated the market. As                    and Monsanto’s nematicidal seed                        rootworm.
                                              some weeds have developed resistance                    treatments; (2) foreclosure effects                       44. Corn is the largest crop grown in
                                              to glyphosate, however, farmers are                     resulting from the combination of                      the United States, accounting for over
                                              increasingly turning to Liberty. And                    Monsanto’s strong position in corn                     $8 billion in seed sales annually. The
                                              while glufosinate and glyphosate are                    seeds with Bayer’s dominant position in                vast majority (92%) of U.S. corn seeds
amozie on DSK3GDR082PROD with NOTICES2




                                              now off patent, competition from                        insecticidal seed treatments for corn                  are genetically modified. Monsanto is
                                              generic suppliers has not prevented                     rootworm; and (3) foreclosure effects                  the leading supplier of those seeds,
                                              Bayer and Monsanto from maintaining                     resulting from the combination of                      effectively controlling 50% of the
                                              branded price premiums. In 2017, Bayer                  Monsanto’s strong position in soybeans                 market between sales of its own branded
                                              had a 7% share of the market for                        with Bayer’s dominant position in                      seeds and sales through its licensees.
                                              foundational herbicides in the United                   fungicidal seed treatment for sudden                   Monsanto’s only significant rival for
                                              States, and Monsanto had a 53% share.                   death syndrome.                                        corn seed is DowDuPont (with a 34%


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                                              27656                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                              share); a few smaller companies also                    expected to continue to grow steadily                  and Monsanto dominating the market
                                              have a small share.                                     over the next decade.                                  with 34% and 56% market shares,
                                                 45. Although Bayer does not sell corn                   50. If allowed to proceed, the merger               respectively. The post-acquisition HHI
                                              seeds, it does sell a critical seed                     would combine Monsanto’s leading                       would be approximately 7,900, with an
                                              treatment called Poncho. When Poncho                    genetically modified soybeans with a                   increase of approximately 3,700.
                                              is applied at a high rate (with a greater               key input used on those seeds (ILeVO).                   55. The effects of the acquisition
                                              amount of the seed treatment coating                    As a result, the merged company would                  would be particularly significant in the
                                              per seed), it protects corn seeds from                  likely hinder its soybean rivals by                    pickling cucumber seed segment, which
                                              corn rootworm—a pest nicknamed ‘‘the                    forcing them to pay more for ILeVO or                  makes up a large majority of cucumber
                                              billion dollar bug’’ for the amount of                  by denying them access to it entirely.                 acres in the United States. Bayer and
                                              loss it costs farmers each year. Poncho                 This loss of competition would likewise                Monsanto are two of only three
                                              is the only significant seed treatment                  make it harder for Monsanto’s rivals to                suppliers of pickling cucumber seeds in
                                              that effectively combats corn rootworm.                 compete, and it would result in higher                 the United States, with Monsanto as the
                                              Thus, most of Monsanto’s corn seed                      prices and fewer choices for genetically               dominant competitor, followed by Bayer
                                              rivals depend on Poncho and are                         modified soybeans.                                     and a company called Rijk Zwaan,
                                              expected to become more dependent as                                                                           based in the Netherlands. As in other
                                              the corn rootworm problem grows.                        D. Vegetable Seeds                                     markets, Bayer has competed against
                                                 46. By placing Bayer’s Poncho and                       51. Finally, the proposed acquisition               Monsanto in this segment through
                                              Monsanto’s leading GM corn seed under                   would eliminate vital competition                      innovation, developing seedless
                                              the control of one company, the                         between Bayer and Monsanto for the                     varieties of pickling cucumbers to
                                              transaction would give the merged                       sale of vegetable seeds. In the past 25                compete with Monsanto’s seeded
                                              company the incentive and ability to                    years, global vegetable production has                 varieties.
                                              foreclose its corn seed rivals who lack                 doubled as breeders have developed
                                              their own seed treatment product and                    new varieties of vegetables with better                (3) Onion seeds
                                              rely on an independent Bayer for their                  disease resistance and higher yields.                     56. Bayer and Monsanto are the two
                                              seed treatment supply. Specifically, the                Unlike with row crops, however, these                  largest onion seed producers in the
                                              merged company would likely hinder                      improvements are due entirely to                       United States and globally, with
                                              its corn seed rivals by forcing them to                 traditional plant breeding rather than                 substantial sales across a wide variety of
                                              pay more for Poncho or by denying                       genetic modification. Bayer and                        onion segments. The U.S. market for
                                              them access to it entirely. This loss of                Monsanto are leaders in these efforts.                 onion seeds is already highly
                                              competition would ultimately hit the                    Today, Monsanto is the largest vegetable               concentrated—besides Bayer and
                                              pocketbooks of American farmers. By                     seed company in the world and Bayer                    Monsanto, the only other producers are
                                              making it harder for Monsanto’s corn                    is fourth largest. If the merger is allowed            Bejo Zaden B.V., based in the
                                              rivals to compete, farmers would pay                    to proceed, the combined company                       Netherlands, and American Takii, Inc.,
                                              higher prices and have fewer effective                  would dominate the industry, with                      based in California. The merger would
                                              choices for genetically modified corn                   global sales rivaling the combined sales               give the combined company a share of
                                              seeds throughout the country.                           of the second- and third-largest                       approximately 71%. The post-
                                                                                                      vegetable producers (Syngenta and                      transaction HHI would be
                                              (3) Vertical foreclosure—fungicidal
                                                                                                      Limagrain, respectively). In the United                approximately 5,000, with an increase
                                              seed treatments for sudden death
                                                                                                      States, the merger would harm                          of approximately 2,500.
                                              syndrome and genetically modified
                                              soybeans                                                competition for five distinct vegetable                (4) Tomato seeds
                                                                                                      species: carrots, cucumbers, onions,
                                                47. Similarly, the merger would harm                  tomatoes, and watermelons.                               57. Bayer and Monsanto are two of the
                                              competition by combining Monsanto’s                                                                            largest producers of tomato seeds in the
                                              leading position in genetically modified                (1) Carrot seeds                                       United States, with market shares of
                                              soybeans with Bayer’s dominant                             52. In the United States, Bayer and                 21% and 34%, respectively. The market
                                              position in fungicidal seed treatments.                 Monsanto are the dominant producers                    for tomato seeds is moderately
                                                48. As discussed above, Monsanto                      of carrot seeds with a combined market                 concentrated, and the merger would
                                              leads the market for genetically                        share of approximately 94%. The post-                  result in a highly concentrated market.
                                              modified soybeans. It is followed by                    transaction HHI would be                               The post-transaction HHI would be
                                              DowDuPont, with Bayer emerging as a                     approximately 8,800, with an increase                  approximately 3,000, with an increase
                                              threat and investing heavily to gain                    of approximately 4,000 resulting from                  of approximately 1,400.
                                              share. Smaller players, such as Beck’s,                 the transaction.
                                              also serve the market.                                                                                         (5) Watermelon seeds
                                                                                                         53. While competition would be
                                                49. Bayer also sells ILeVO, the only                  harmed in the market for carrot seeds as                  58. Lastly, the watermelon seed
                                              seed treatment that effectively protects                a whole, the effects of the acquisition                market is already highly concentrated,
                                              soybeans from a fungal disease called                   would be particularly acute in the ‘‘cut-              with Bayer and Syngenta, followed by
                                              sudden death syndrome (SDS).                            and-peel’’ carrot segment, which                       Monsanto, as the largest suppliers in the
                                              According to Bayer, SDS costs farmers                   consists of certain carrot varieties that              United States. Bayer has a 37% market
                                              an average of over 44 million bushels in                are processed and sold as ready-to-eat                 share in watermelon seeds, and
                                              lost yield per year, and losses from SDS                baby carrots. Bayer and Monsanto are                   Monsanto has a 6% share. As a result,
                                              damage are expected to increase,                        particularly close competitors in this                 the post-acquisition HHI would be
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                                              making Bayer’s seed treatment a critical                segment, which constitutes                             approximately 3,300, with an increase
                                              tool for farmers in areas where SDS is                  approximately 80% of all carrots                       of approximately 400. Monsanto’s
                                              a particular risk. Bayer sells ILeVO to                 consumed in the United States.                         market share in watermelon seeds
                                              Monsanto’s soybean rivals, including                                                                           understates its competitive significance;
                                              DowDuPont and Beck’s. Since the                         (2) Cucumber seeds                                     its recent introduction of competitive
                                              launch of ILeVO in 2015, Bayer’s sales                    54. The market for cucumber seeds is                 seedless watermelon varieties, which
                                              of ILeVO have doubled annually and are                  also highly concentrated, with Bayer                   are in high demand and already offered


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                                                                           Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices                                              27657

                                              by Monsanto’s competitors, would                        recognized, barriers to entry in the                   lllllllllllllllllllll
                                              significantly improve its position going                relevant markets are extraordinarily                   Caroline E. Laise,
                                              forward.                                                high.                                                  Assistant Chief, Transportation, Energy &
                                                                                                        63. In addition to the difficulty of                 Agriculture Section.
                                              V. ANTICOMPETITIVE EFFECTS                                                                                     lllllllllllllllllllll
                                                                                                      entry, the proposed acquisition is
                                                 59. The proposed acquisition would                   unlikely to generate verifiable, merger-               Scott I. Fitzgerald,
                                              substantially lessen competition and                    specific efficiencies that would offset                Benjamin H. Able,
                                              harm consumers in each of the relevant                                                                         Don Amlin (D.C. Bar #978349),
                                                                                                      the proposed acquisition’s likely
                                              markets, either by eliminating head-to-                                                                        Meagan K. Bellshaw,
                                                                                                      anticompetitive effects in the relevant                Cory Brader Leuchten,
                                              head competition between Bayer and                      markets.                                               Michele B. Cano,
                                              Monsanto or, in the case of certain seed                                                                       Barbara W. Cash,
                                              treatments, raising the price of a key                  VII. VIOLATIONS ALLEGED
                                                                                                                                                             Katherine A. Celeste,
                                              input. In each of these markets, the                      64. Bayer’s proposed acquisition of                  Aaron Comenetz (D.C. Bar #479572),
                                              merger would likely result in higher                    Monsanto is likely to substantially                    Erin L. Craig,
                                              prices, lower quality, and reduced                      lessen competition in the relevant                     Emma Dick,
                                              choice. The price effects in these                      markets in violation of Section 7 of the               J. Richard Doidge,
                                              markets would likely result in hundreds                 Clayton Act, 15 U.S.C. § 18.                           Julie Elmer (D.C. Bar #1520972),
                                              of millions of dollars per year in harm,                  65. Unless enjoined, the proposed                    Jeremy Evans (D.C. Bar #478097),
                                                                                                                                                             Andrew J. Ewalt (D.C. Bar #493433),
                                              raising costs to farmers and consumers                  acquisition would likely have the                      Tracy Fisher,
                                              throughout the United States.                           following anticompetitive effects in the               Rachel A. Flipse,
                                                 60. But the harm does not stop there.                relevant markets:                                      Leah Graham (D.C. Bar #989727),
                                              The merger would also have a                              (a) eliminate present and future                     Brian Hanna,
                                              significant impact on innovation.                       competition between Bayer and                          John A. Holler,
                                              Today, four companies dominate the                      Monsanto;                                              Rachelle R. Ketchum,
                                              industry’s research and development                       (b) lessen innovation;                               Amanda Klovers,
                                              efforts for seeds and traits. Bayer and                   (c) raise prices for farmers and other               Patrick Kuhlmann,
                                              Monsanto are the industry leaders, with                 purchasers; and                                        Robert A. Lepore,
                                                                                                        (d) reduce quality, service, and choice              Michelle Livingston (D.C. Bar #461268),
                                              Bayer emerging as a threat to
                                                                                                      for farmers and other purchasers.                      Njeri Mugure,
                                              Monsanto’s dominance. In 2016, for                                                                             Michael Nash,
                                              example, Bayer spent more on seeds-                     VIII. REQUEST FOR RELIEF                               John R. O’Gorman,
                                              related research and development as a                                                                          Scott Reiter,
                                              percentage of sales than any of the other                 66. The United States requests that                  James A. Ryan,
                                              Big Four. As leading innovators, Bayer                  this Court do the following:                           Julia A. Schiller (D.C. Bar #986369),
                                              and Monsanto push each other to                           (a) adjudge Bayer’s proposed                         Adam T. Severt,
                                              improve their current products and                      acquisition of Monsanto to violate                     Patricia L. Sindel (D.C. Bar #997505),
                                              technologies, monitor each other’s                      Section 7 of the Clayton Act, 15 U.S.C.                Chinita M. Sinkler,
                                              research efforts, and compete to develop                § 18;                                                  Mark Tobey,
                                                                                                        (b) permanently enjoin Bayer and                     Scott A. Westrich,
                                              new blockbuster products.                                                                                      Christopher M. Wilson,
                                                 61. Without the merger, this                         Monsanto from consummating their
                                                                                                      proposed acquisition or from entering                  Catharine Wright.
                                              competition would intensify as both                                                                            Attorneys for the United States.
                                              companies pursue what the industry                      into or carrying out any other
                                                                                                      agreement, understanding, or plan by                   U.S. Department of Justice Antitrust Division
                                              refers to as integrated solutions—                                                                             450 5th Street, NW, Suite 8000 Washington,
                                              combinations of seeds, traits, and crop                 which control of the assets or businesses
                                                                                                      of Bayer and Monsanto would be                         DC 20530 Tel.: (202) 353–3863 Fax: (202)
                                              protection products, supported by                                                                              616–2441 E-mail: scott.fitzgerald@usdoj.gov.
                                              digital-farming technologies and other                  combined;
                                                                                                        (c) award the United States its costs
                                              services. Although integrated solutions                                                                        UNITED STATES DISTRICT COURT
                                                                                                      of this action; and
                                              are still evolving, it is widely believed                 (d) award the United States other                    FOR THE DISTRICT OF COLUMBIA
                                              that only the Big Four companies—each                   relief that the Court deems just and                     United States of America, Plaintiff, v.
                                              with its own unique strengths—will be                   proper.                                                Bayer AG, Monsanto Company, and BASF
                                              able to offer fully integrated solutions to                                                                    SE, Defendants.
                                              farmers. With this merger, that                         Dated: _______
                                                                                                                                                             Civil Action No.: 1:18–cv–1241
                                              competition would be lost.                              Respectfully submitted,                                Judge James E. Boasberg
                                                                                                      FOR PLAINTIFF UNITED STATES OF
                                              VI. ABSENCE OF COUNTERVAILING                           AMERICA:                                               PROPOSED FINAL JUDGMENT
                                              FACTORS                                                 lllllllllllllllllllll                                    WHEREAS, Plaintiff United States of
                                                 62. Entry would not prevent the                      Makan Delrahim,                                        America filed its Complaint against
                                              merger’s likely anticompetitive effects.                Assistant Attorney General for Antitrust.
                                                                                                                                                             Bayer AG (‘‘Bayer’’) and Monsanto
                                              It takes many years and hundreds of                     lllllllllllllllllllll                                  Company (‘‘Monsanto’’) on May 29,
                                              millions of dollars to discover new crop                Bernard A. Nigro, Jr. (D.C. Bar #412357),
                                                                                                      Deputy Assistant Attorney General.
                                                                                                                                                             2018;
                                              protection chemicals and to develop                                                                              AND WHEREAS, pursuant to a
                                              and commercialize new traits. Once a                    lllllllllllllllllllll                                  Stipulation and Order among Bayer,
                                                                                                      Donald G. Kempf, Jr.,
                                              new trait has been discovered,                                                                                 Monsanto, and BASF SE (‘‘BASF’’)
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                                                                                                      Deputy Assistant Attorney General.
                                              companies cannot successfully                                                                                  (collectively, ‘‘Defendants’’) and
                                                                                                      lllllllllllllllllllll
                                              incorporate that trait and sell seeds                   Patricia A. Brink,                                     Plaintiff, the Court has joined BASF as
                                              without access to the extensive libraries               Director of Civil Enforcement.                         a defendant to this action for the
                                              of elite seed varieties that are already                lllllllllllllllllllll                                  purposes of settlement and for the entry
                                              owned by Bayer, Monsanto, and a small                   Kathleen S. O’Neill,                                   of this Final Judgment;
                                              number of other companies. As Bayer’s                   Chief, Transportation, Energy & Agriculture              AND WHEREAS, Plaintiff and
                                              and Monsanto’s executives have                          Section.                                               Defendants, by their respective


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                                              27658                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                              attorneys, have consented to the entry of               affiliates, partnerships and joint                     by or critical to the operation of the
                                              this Final Judgment without trial or                    ventures, and their directors, officers,               Balance Herbicide Business, including,
                                              adjudication of any issue of fact or law,               managers, agents, and employees.                       but not limited to, all data concerning
                                              and without this Final Judgment                            B. ‘‘Monsanto’’ means Defendant                     historical and current research and
                                              constituting any evidence against or                    Monsanto Company, a Delaware                           development efforts, including, but not
                                              admission by any party regarding any                    corporation with its headquarters in St.               limited to, designs of experiments and
                                              issue of fact or law;                                   Louis, Missouri, its successors and                    the results of successful and
                                                 AND WHEREAS, Defendants agree to                     assigns, and its subsidiaries, divisions,              unsuccessful designs and experiments.
                                              be bound by the provisions of this Final                groups, affiliates, partnerships and joint                G. ‘‘Broad Acre Seeds and Traits
                                              Judgment pending its approval by this                   ventures, and their directors, officers,               Business’’ means Bayer’s global business
                                              Court;                                                  managers, agents, and employees.                       of researching, developing,
                                                 AND WHEREAS, the essence of this                        C. ‘‘BASF’’ means Defendant BASF                    manufacturing, and selling broad acre
                                              Final Judgment is the prompt and                        SE, a Societas Europaea with its                       seeds and traits, including, but not
                                              certain divestiture of certain businesses,              headquarters in Ludwigshafen,                          limited to, the global cotton seed
                                              rights, and assets by Bayer and                         Germany, its successors and assigns,                   business; the global canola seed
                                              Monsanto to assure that competition is                  and its subsidiaries, divisions, groups,               business; the global soybean seed
                                              not substantially lessened;                             affiliates, partnerships and joint                     business; the global LibertyLink trait
                                                 AND WHEREAS, Plaintiff requires                      ventures, and their directors, officers,               business for all crops except rice; the
                                              Bayer and Monsanto to make certain                      managers, agents, and employees.                       global research and development
                                              divestitures to BASF for the purpose of                    D. ‘‘’839 Business’’ means Bayer’s                  programs for wheat and ‘‘canola
                                              remedying the loss of competition                       global business of researching,                        quality’’ Brassica juncea; and the global
                                              alleged in the Complaint;                               developing, and manufacturing the                      trait research and development
                                                 AND WHEREAS, Bayer and Monsanto                      BCS–CT12839 pipeline product.                          activities. The Broad Acre Seeds and
                                              have represented to Plaintiff that all of                  E. ‘‘Balance Herbicide Business’’                   Traits Business excludes those assets
                                              the divestitures required below can and                 means Bayer’s global business of                       that relate solely to the following:
                                              will be made as required by this Final                  researching, developing, manufacturing,                hybrid rice sold in Asia, hybrid cotton
                                              Judgment, BASF has represented to                       and selling isoxaflutole-based                         sold in India, traditional juncea
                                              Plaintiff that it can and will acquire the              herbicides for use on crops that are                   (mustard) and millet sold in India,
                                              Divestiture Assets pursuant to its                      isoxaflutole-tolerant as a result of                   cotton sold in South Africa, the research
                                              obligations under this Final Judgment,                  genetic modification.                                  and development program for sugarcane
                                              and Defendants have represented to                         F. ‘‘Balance Herbicide Divestiture                  in Brazil, the research and development
                                              Plaintiff that they will later raise no                 Assets’’ means the following assets                    program for sugarbeets in Europe, and
                                              claim of hardship or difficulty as                      related to the Balance Herbicide                       the LibertyLink event in rice.
                                              grounds for failing to comply with their                Business:                                                 H. ‘‘Broad Acre Seeds and Traits
                                              obligations under this Final Judgment or                   (1) all tangible assets used primarily              Divestiture Assets’’ means the following
                                              for asking this Court to modify any of                  by or critical to the operation of the                 assets related to the Broad Acre Seeds
                                              the provisions contained below;                         Balance Herbicide Business, including,                 and Traits Business:
                                                 NOW THEREFORE, before any                            but not limited to, all transferable                      (1) all tangible assets that comprise
                                              testimony is taken, without trial or                    licenses, permits, product registrations,              the Broad Acre Seeds and Traits
                                              adjudication of any issue of fact or law,               regulatory submissions, and                            Business, including, but not limited to,
                                              and upon consent of the parties, it is                  authorizations issued by or submitted to               research and development activities; all
                                              ORDERED, ADJUDGED, AND                                  any governmental organization; all                     manufacturing plants and equipment,
                                              DECREED:                                                contracts, agreements, leases,                         tooling and fixed assets, personal
                                                                                                      commitments, certifications, and                       property, inventory, office furniture,
                                              I. JURISDICTION                                         understandings, including supply                       materials, supplies, and other tangible
                                                 This Court has jurisdiction over the                 agreements; and all customer lists,                    property; all transferable licenses,
                                              subject matter of and each of the parties               accounts, credit records, and                          permits, product registrations and
                                              hereto with respect to this action. The                 transferable customer contracts;                       regulatory submissions (including
                                              Complaint states a claim upon which                        (2) all patents used by the Balance                 supporting data), certifications, and
                                              relief may be granted against Bayer and                 Herbicide Business;                                    authorizations issued by or submitted to
                                              Monsanto under Section 7 of the                            (3) a worldwide, exclusive, royalty-                any governmental organization; all
                                              Clayton Act, as amended (15 U.S.C.                      free, paid-up, irrevocable, perpetual                  contracts, teaming arrangements,
                                              § 18). Pursuant to the Stipulation and                  license to Bayer’s BALANCE trademark                   agreements, leases, commitments,
                                              Order filed simultaneously with this                    for marketing and selling isoxaflutole-                certifications, and understandings,
                                              Final Judgment joining BASF as a                        based herbicides for use on crops that                 including supply agreements; all
                                              defendant to this action, BASF has                      are isoxaflutole-tolerant as a result of               customer lists, accounts, credit records,
                                              consented to this Court’s exercise of                   genetic modification;                                  and transferable customer contracts; all
                                              specific personal jurisdiction over BASF                   (4) a worldwide, non-exclusive,                     other business and administrative
                                              in this matter solely for the purposes of               royalty-free, paid-up, irrevocable,                    records; all seed production facilities;
                                              settlement and for the entry and                        perpetual license (sub-licensable to any               all breeding stations; all research and
                                              enforcement of the Final Judgment.                      tollers designated by BASF) to any                     development facilities; all germplasm;
                                                                                                      intellectual property, registration data,              and all breeding data, including, but not
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                                              II. DEFINITIONS                                         technology, know-how, or other rights                  limited to, phenotype, genotype,
                                                 As used in this Final Judgment:                      used in the manufacture or formulation                 molecular markers, and performance
                                                 A. ‘‘Bayer’’ means Defendant Bayer                   of isoxaflutole-based herbicides for use               data;
                                              AG, a German corporation with its                       on crops that are isoxaflutole-tolerant as                (2) all intangible assets owned,
                                              headquarters in Leverkusen, Germany,                    a result of genetic modification; and                  licensed, controlled, or used by the
                                              its successors and assigns, and its                        (5) all other intangible assets owned,              Broad Acre Seeds and Traits Business,
                                              subsidiaries, divisions, groups,                        licensed, controlled, or used primarily                including, but not limited to, all patents,


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                                                                           Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices                                            27659

                                              plant variety certificates, licenses and                for canola/oilseed rape, potatoes,                     Business, including, but not limited to,
                                              sublicenses, intellectual property,                     sugarbeets, cereals, or vegetables.                    designs of experiments and the results
                                              copyrights, trademarks, trade names,                       J. ‘‘Collaboration’’ means an                       of successful and unsuccessful designs
                                              service marks, service names, technical                 agreement among non-affiliated firms                   and experiments.
                                              information, computer software and                      involving some sharing of resources,                      Notwithstanding Paragraphs II(L)(1)
                                              related documentation, know-how,                        management, or risk, including, but not                and II(L)(2) above, the Digital
                                              trade secrets, drawings, blueprints,                    limited to, joint ventures or research                 Agriculture Divestiture Assets do not
                                              designs, design protocols, specifications               alliances. For the avoidance of doubt,                 include trademarks, trade names,
                                              for materials, specifications for parts                 Collaboration for the purpose of this                  service marks, or service names
                                              and devices, safety procedures for the                  Final Judgment does not include (1)                    containing the name ‘‘Bayer.’’
                                              handling of materials and substances,                   stand-alone intellectual property                         M. ‘‘Divestiture Assets’’ means:
                                              quality assurance and control                           licenses, including patent, trademark,                    (1) the Balance Herbicide Divestiture
                                              procedures, design tools and simulation                 software, know-how, variety,                           Assets;
                                              capability, manuals and technical                       germplasm, and registration data license                  (2) the Broad Acre Seeds and Traits
                                              information provided by Bayer to its                    agreements; (2) stand-alone crop                       Divestiture Assets;
                                              own employees, customers, suppliers,                    protection supply or tolling agreements;                  (3) the Digital Agriculture Divestiture
                                              agents, or licensees; and research data                 (3) cooperation agreements related to                  Assets;
                                              concerning historical and current                       advocacy and public policy issues; (4)                    (4) the Glufosinate Ammonium
                                              research and development efforts,                       agreements related to participation in                 Divestiture Assets;
                                              including, but not limited to, designs of               industry groups and organizations; and                    (5) the Midwest Soybean Germplasm
                                              experiments and the results of                          (5) material transfer agreements.                      Divestiture Assets;
                                                                                                         K. ‘‘Digital Agriculture Business’’                    (6) the Pipeline Herbicide Divestiture
                                              successful and unsuccessful designs and
                                                                                                      means Bayer’s global business of                       Assets;
                                              experiments; and                                                                                                  (7) the Seed Treatment Divestiture
                                                 (3) the copy of Bayer’s microbial                    researching, developing, manufacturing,
                                                                                                      and selling digital agriculture products.              Assets; and
                                              strain collection (‘‘MSC’’) stored in                                                                             (8) the Vegetable Seed Divestiture
                                                                                                         L. ‘‘Digital Agriculture Divestiture
                                              Morrisville, North Carolina, including,                                                                        Assets.
                                                                                                      Assets’’ means the following assets
                                              but not limited to, all biological                      related to the Digital Agriculture                        N. ‘‘Divestiture Businesses’’ means the
                                              materials comprising the MSC and all                    Business:                                              Balance Herbicide Business, the Broad
                                              documents, data, information, reference                    (1) all tangible assets that comprise               Acre Seeds and Traits Business, the
                                              materials, and trade secrets related to                 the Digital Agriculture Business,                      Digital Agriculture Business, the
                                              the MSC, and (a) a worldwide,                           including, but not limited to, research                Glufosinate Ammonium Business, the
                                              exclusive, royalty-free, paid-up,                       and development activities; all                        Pipeline Herbicide Business, the Seed
                                              irrevocable, perpetual license to use the               manufacturing plants and equipment,                    Treatment Business, and the Vegetable
                                              MSC for trait research in any crop and                  tooling and fixed assets, personal                     Seed Business.
                                              (b) a worldwide, non-exclusive, royalty-                property, inventory, office furniture,                    O. ‘‘Divestiture Closing Date’’ means
                                              free, paid-up, irrevocable, perpetual                   materials, supplies, and other tangible                (1) with respect to assets, employees,
                                              license to use the MSC for any other                    property; all contracts, teaming                       and agreements related to all Divestiture
                                              agricultural use.                                       arrangements, agreements, leases,                      Assets except the Vegetable Seed
                                                 Notwithstanding Paragraphs II(H)(1)                  commitments, certifications, and                       Divestiture Assets, the date on which
                                              through II(H)(3) above, the Broad Acre                  understandings, including supply                       Bayer divests those Divestiture Assets to
                                              Seeds and Traits Divestiture Assets do                  agreements; all customer lists, accounts,              BASF, and (2) with respect to assets,
                                              not include the facilities identified in                credit records, and transferable                       employees, and agreements related to
                                              Appendix A, Paragraphs 1 and 2, or                      customer contracts; all other business                 the Vegetable Seed Divestiture Assets,
                                              trademarks, trade names, service marks,                 and administrative records; all research               the date on which Bayer divests the
                                              or service names containing the name                    and development facilities; and                        Vegetable Seed Divestiture Assets to
                                              ‘‘Bayer.’’                                                 (2) all intangible assets owned,                    BASF.
                                                 I. ‘‘Clothianidin Seed Treatment                     licensed, controlled, or used by the                      P. ‘‘Fluopyram Seed Treatment
                                              Business’’ means Bayer’s global business                Digital Agriculture Business, including,               Business’’ means Bayer’s global business
                                              of researching, developing,                             but not limited to, all patents, licenses              of researching, developing,
                                              manufacturing, and selling seed                         and sublicenses, intellectual property,                manufacturing, and selling seed
                                              treatments containing clothianidin,                     copyrights, trademarks, trade names,                   treatments containing fluopyram. The
                                              Bacillus firmus strain I–1582, or                       service marks, service names, technical                Fluopyram Seed Treatment Business
                                              Bacillus thuringiensis strain EX 297512.                information, computer software and                     excludes Bayer’s business of
                                              The Clothianidin Seed Treatment                         related documentation, know-how,                       researching, developing, manufacturing,
                                              Business excludes Bayer’s business of                   trade secrets, drawings, blueprints,                   and selling cereals seed treatments
                                              manufacturing and selling seed                          designs, design protocols, specifications              containing fluopyram, claiming only
                                              treatment mixture products containing                   for materials, specifications for parts                fungicidal properties, and claiming no
                                              clothianidin for canola/oilseed rape,                   and devices, safety procedures for the                 nematode control effect. For the
                                              potatoes, sugarbeets, cereals, or                       handling of materials and substances,                  avoidance of doubt, this exclusion does
                                              vegetables that have been                               quality assurance and control                          not prevent BASF from researching,
                                              commercialized by Bayer as of the date                  procedures, design tools and simulation                developing, manufacturing, and selling
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                                              of filing of the Complaint in this matter               capability, manuals and technical                      seed treatments for cereals containing
                                              (except Poncho/VOTiVO, Poncho Plus,                     information provided by Bayer to its                   fluopyram.
                                              and Poncho Super). For the avoidance                    own employees, customers, suppliers,                      Q. ‘‘Glufosinate Ammonium
                                              of doubt, these exclusions do not                       agents, or licensees; and research data                Business’’ means Bayer’s global business
                                              prevent BASF from researching,                          concerning historical and current                      of researching, developing,
                                              developing, manufacturing, and selling                  research and development efforts                       manufacturing, and selling glufosinate
                                              seed treatments containing clothianidin                 related to the Digital Agriculture                     ammonium herbicide products.


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                                              27660                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                                 R. ‘‘Glufosinate Ammonium                               (7) all other intangible assets owned,              developed by Monsanto that BASF
                                              Divestiture Assets’’ means the following                licensed, controlled, or used primarily                subsequently will choose pursuant to
                                              assets related to the Glufosinate                       by or critical to the operation of the                 the following process: Bayer will
                                              Ammonium Business:                                      Glufosinate Ammonium Business,                         expeditiously provide BASF with access
                                                 (1) Bayer’s glufosinate ammonium                     including, but not limited to, all                     (including to all supporting data) to all
                                              manufacturing facilities located in                     licenses and sublicenses, intellectual                 of the Monsanto Corn States lines (for
                                              Hurth/Knapsack, Germany; Muskegon,                      property, copyrights, trademarks, trade                which Monsanto has the ability to offer
                                              Michigan; Mobile, Alabama; and                          names, service marks, service names,                   breeding rights) developed by Monsanto
                                              Frankfurt, Germany; Bayer’s glufosinate                 technical information, computer                        for each of the years 2019 and 2020.
                                              formulation facilities located in Regina,               software and related documentation,                    BASF may choose two varieties for each
                                              Canada and Muskegon, Michigan; and                      know-how, trade secrets, drawings,                     of maturity zones zero through four,
                                              these facilities’ associated                            blueprints, designs, design protocols,                 resulting in a license for twenty (20)
                                              manufacturing equipment, tooling and                    specifications for materials,                          lines over the two (2) years;
                                              fixed assets, personal property,                        specifications for parts and devices,                     (3) all data (including, but not limited
                                              inventory, office furniture, materials,                 safety procedures for the handling of                  to, phenotype, genotype, molecular
                                              supplies, and other tangible property;                  materials and substances, quality                      markers, and performance data) related
                                                 (2) all other tangible assets used                   assurance and control procedures,                      to the transferred populations or
                                              primarily by or critical to the operation               design tools and simulation capability,                licensed breeding varieties in Paragraph
                                              of the Glufosinate Ammonium Business,                   manuals and technical information                      II(S)(1) above for the purpose of
                                              including all contracts, teaming                        provided by Bayer to its own                           developing commercial soybean
                                              arrangements, agreements, leases,                       employees, customers, suppliers, agents,               varieties; and a copy of all data
                                              commitments, certifications, and                        or licensees; and research data                        (including, but not limited to,
                                              understandings, including supply                        concerning historical and current                      phenotype, genotype, molecular
                                              agreements; all transferable licenses,                  research and development efforts,                      markers, and performance data) related
                                              permits, and authorizations issued by or                including, but not limited to, designs of              to the transferred populations or
                                              submitted to any governmental                           experiments and the results of                         licensed breeding varieties in Paragraph
                                              organization; all customer lists,                       successful and unsuccessful designs and                II(S)(2) above for the purpose of
                                              accounts, credit records, and                           experiments; and                                       developing commercial soybean
                                              transferable customer contracts; and all                   (8) a worldwide, non-exclusive,                     varieties; and
                                              other business and administrative                       royalty-free, paid-up, irrevocable,                       (4) all rights to develop commercial
                                              records;                                                perpetual license to all other intellectual            soybean varieties using the transferred
                                                 (3) all patents used in the Glufosinate              property (owned by Bayer or that Bayer                 populations or licensed breeding
                                              Ammonium Business, except for (a)                       has the right to license) that is used by              varieties in Paragraphs II(S)(1) and
                                              patents related to the mixture or                       the Glufosinate Ammonium Business                      II(S)(2) above, which rights shall not be
                                              combined or sequential use of                           and not addressed earlier in Paragraph                 limited other than requiring compliance
                                              glufosinate ammonium with other active                  II.R, including, but not limited to, all               with trait license agreements for any
                                              ingredients (‘‘Glufosinate Mixture and                  copyrights, trademarks, trade names,                   Monsanto traits remaining in any
                                              Use Patents’’) and (b) patents related to               service marks, service names, and trade                developed line.
                                              the use of glufosinate ammonium, alone                  secrets. Such license shall grant BASF                    T. ‘‘Pipeline Herbicide Business’’
                                              or in mixtures, on plants containing                    the right to make, have made, use, sell                means Bayer’s global business of
                                              genetically modified events developed                   or offer for sale, copy, create derivative             researching, developing, and
                                              or to be developed by Bayer or                          works of, modify, improve, display,                    manufacturing ketoenole and N,O-
                                              Monsanto (‘‘Glufosinate Over-The-Top                    perform, and enhance the licensed                      Chelator (‘‘NOC’’) herbicides for non-
                                              Patents’’);                                             intangible assets. Any improvements or                 selective uses.
                                                 (4) a worldwide, exclusive, royalty-                 modifications to these intangible assets                  U. ‘‘Pipeline Herbicide Divestiture
                                              free, paid-up, irrevocable, perpetual                   developed by BASF shall be owned                       Assets’’ means the following assets
                                              license for all Glufosinate Mixture and                 solely by BASF.                                        related to the Pipeline Herbicide
                                              Use Patents owned, controlled, licensed,                   Notwithstanding Paragraphs II(R)(1)                 Business:
                                              or used by Bayer or Monsanto with one                   through II(R)(8) above, the Glufosinate                   (1) a worldwide, exclusive, royalty-
                                              or more claims covering a BASF                          Ammonium Divestiture Assets do not                     free, paid-up, irrevocable, perpetual
                                              proprietary active ingredient;                          include the thirty (30) general office                 license in the field of non-selective uses
                                                 (5) a worldwide, non-exclusive,                      facilities identified in Appendix A,                   for all Bayer intellectual property rights
                                              irrevocable, perpetual covenant not to                  Paragraph 1; the fourteen (14)                         and know-how related to Bayer’s
                                              assert against BASF or its direct or                    formulation and filling sites identified               ketoenole and to Bayer’s NOC herbicide
                                              indirect customers all other Glufosinate                in Appendix A, Paragraph 3; or                         candidates;
                                              Mixture and Use Patents owned,                          trademarks, trade names, service marks,                   (2) a worldwide, non-exclusive,
                                              controlled, licensed, or used by Bayer or               or service names containing the name                   royalty-free, paid-up, irrevocable,
                                              Monsanto with one or more claims                        ‘‘Bayer.’’                                             perpetual license (sub-licensable to any
                                              covering any other active ingredient,                      S. ‘‘Midwest Soybean Germplasm                      tollers designated by BASF) to any
                                              except for any active ingredient itself                 Divestiture Assets’’ means the following               intellectual property, registration data,
                                              covered by a Bayer or Monsanto patent,                  Monsanto assets:                                       technology, know-how, or other rights
                                              during the life of that patent;                            (1) the four hundred and nineteen                   used in the manufacture or formulation
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                                                 (6) a worldwide, non-exclusive,                      (419) soybean populations identified in                of ketoenole and of NOC herbicides for
                                              irrevocable, perpetual covenant not to                  Appendix B;                                            non-selective uses;
                                              assert against BASF or its direct or                       (2) a worldwide, non-exclusive,                        (3) all data, documents, and know-
                                              indirect customers all current or future                royalty-free, paid-up, irrevocable,                    how from in vitro assays related to the
                                              Glufosinate Over-The-Top Patents                        perpetual license for breeding purposes                use of Bayer’s ketoenole and Bayer’s
                                              owned, controlled, licensed, or used by                 (subject to the limitations in Paragraph               NOC herbicide candidates with Bayer’s
                                              Bayer or Monsanto;                                      II(S)(4)) to twenty (20) soybean varieties             relevant herbicide-tolerance traits;


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                                                                           Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices                                            27661

                                                 (4) all field trials conducted on                    Bacillus thuringiensis strain EX 297512                   (10) all other intangible assets owned,
                                              Bayer’s ketoenole and Bayer’s NOC                       with any such other active ingredient(s)               licensed, controlled, or used by the Seed
                                              herbicide candidates for non-selective                  for seed treatment uses; provided,                     Treatment Business, including, but not
                                              uses;                                                   however, that this license does not                    limited to, all licenses and sublicenses,
                                                 (5) samples of all ketoenole and all                 include any right to make, sell, use, or               intellectual property, copyrights,
                                              NOC herbicide molecules; and                            otherwise commercialize any active                     trademarks, trade names, service marks,
                                                 (6) all data and information on the                  ingredient itself covered by a Bayer or                service names, technical information,
                                              molecular structure and other                           Monsanto patent, during the life of that               know-how, trade secrets, drawings,
                                              characteristics of Bayer’s ketoenole and                patent;                                                designs, design protocols, specifications
                                              Bayer’s NOC herbicide candidates.                          (5) a worldwide, exclusive, royalty-                for materials, safety procedures for the
                                                 V. ‘‘Relevant Personnel’’ means all                  free, paid-up, irrevocable, perpetual                  handling of materials and substances,
                                              Bayer employees who have supported or                   license for seed treatment uses to all                 quality assurance and control
                                              whose job related to the Divestiture                    patents used in Bayer’s current and                    procedures, design tools and simulation
                                              Businesses at any time between January                  pipeline ILeVO and COPeO seed                          capability, manuals and technical
                                              1, 2015 and the Divestiture Closing                     treatments; provided, however, that this               information provided by Bayer to its
                                              Date.                                                   license will be non-exclusive for cereals              own employees, customers, suppliers,
                                                 W. ‘‘Seed Treatment Business’’ means                 seed treatments containing fluopyram,                  agents, or licensees, and data
                                              the Clothianidin Seed Treatment                         claiming only fungicidal properties, and               concerning historical and current
                                              Business, the Fluopyram Seed                            claiming no nematode control effect;                   research and development efforts,
                                              Treatment Business, and the ’839                                                                               including, but not limited to, designs of
                                                                                                         (6) a worldwide, exclusive, royalty-
                                              Business.                                                                                                      experiments and the results of
                                                 X. ‘‘Seed Treatment Divestiture                      free, paid-up, irrevocable, perpetual
                                                                                                      license to any other patent with one or                successful and unsuccessful designs and
                                              Assets’’ means the following assets                                                                            experiments.
                                              related to the Seed Treatment Business:                 more claims covering the combination
                                                                                                      of fluopyram with another active                          Notwithstanding Paragraphs II(X)(1)
                                                 (1) Bayer’s Seed Growth Center                                                                              through II(X)(10) above, the Seed
                                              located in Research Triangle Park, North                ingredient, for BASF to combine
                                                                                                      fluopyram with any such other active                   Treatment Divestiture Assets do not
                                              Carolina, including all equipment,                                                                             include (a) active ingredient production
                                              tooling and fixed assets, personal                      ingredient(s) for seed treatment uses;
                                                                                                      provided, however, that (a) this license               facilities in Dormagen, Germany;
                                              property, inventory, office furniture,                                                                         Bergkamen, Germany; or Tlaxcala,
                                              materials, supplies, and other tangible                 will be non-exclusive for cereals seed
                                                                                                      treatments containing fluopyram,                       Mexico; (b) formulation, filling, or
                                              property at this facility;                                                                                     packaging sites in Amatitlan,
                                                 (2) all other tangible assets used                   claiming only fungicidal properties, and
                                                                                                                                                             Guatemala; Belford Roxo, Brazil;
                                              primarily by or critical to the operation               claiming no nematode control effect;
                                                                                                                                                             Frankfurt, Germany; Kansas City,
                                              of the Seed Treatment Business,                         and (b) this license does not include any
                                                                                                                                                             Missouri; Pinkenba, Australia; or Zarate,
                                              including, but not limited to, all                      right to make, sell, use, or otherwise
                                                                                                                                                             Argentina; or (c) trademarks, trade
                                              transferable licenses, permits,                         commercialize any active ingredient
                                                                                                                                                             names, service marks, or service names
                                              certifications, product registrations,                  itself covered by a Bayer or Monsanto
                                                                                                                                                             containing the name ‘‘Bayer.’’
                                              regulatory submissions, and                             patent, during the life of that patent;                   Y. ‘‘Shared Confidential Information’’
                                              authorizations issued by or submitted to                   (7) all patents used exclusively in the             means confidential business
                                              any governmental organization; all                      ’839 Business, and a worldwide,                        information relayed from Bayer to
                                              contracts, teaming arrangements,                        exclusive, royalty-free, paid-up,                      BASF, or vice versa, as a result of any
                                              agreements, commitments,                                irrevocable, perpetual license to all                  agreements entered into pursuant to
                                              certifications, and understandings,                     other patents with one or more claims                  Paragraph IV(G) or Paragraph IV(H) of
                                              including supply agreements; all                        used in the ’839 Business;                             this Final Judgment, including
                                              customer lists, accounts, credit records,                  (8) a worldwide, non-exclusive,                     quantities, units, and prices of items
                                              and transferable customer contracts; all                irrevocable, perpetual covenant not to                 ordered or purchased, and any other
                                              sales and marketing assets, including,                  assert against BASF and its direct or                  competitively sensitive information
                                              but not limited to, distribution plans                  indirect customers all other patents                   regarding Bayer’s or BASF’s
                                              and any market research conducted; all                  owned, controlled, licensed, or used by                performance under these agreements.
                                              other business and administrative                       Bayer or Monsanto with claims covering                    Z. ‘‘Vegetable Seed Business’’ means
                                              records; samples of all molecules; all                  the mixture or combined or sequential                  Bayer’s global business of researching,
                                              information on the molecular structure                  use of clothianidin, Bacillus firmus                   developing, manufacturing, and selling
                                              and other characteristics of the                        strain I–1582, Bacillus thuringiensis                  vegetable seeds.
                                              products; and all internal and available                strain EX 297512, fluopyram, or BCS–                      AA. ‘‘Vegetable Seed Divestiture
                                              external studies;                                       CT12839 with any active ingredient or                  Assets’’ means the following assets
                                                 (3) all patents used in Bayer’s current              combination of active ingredients,                     related to the Vegetable Seed Business:
                                              and pipeline Poncho, Poncho Plus,                       except for any active ingredient itself                   (1) all tangible assets that comprise
                                              Poncho Super, Poncho/VOTiVO,                            covered by a Bayer or Monsanto patent,                 the Vegetable Seed Business including,
                                              Poncho/VOTiVO 2.0, VOTiVO, VOTiVO                       during the life of that patent;                        but not limited to, research and
                                              2.0, and TWO.0 seed treatments;                            (9) a worldwide, non-exclusive,                     development activities; all
                                                 (4) a worldwide, exclusive, royalty-                 royalty-free, paid-up, irrevocable,                    manufacturing plants and equipment,
                                              free, paid-up, irrevocable, perpetual                   perpetual license (sub-licensable to any               tooling and fixed assets, personal
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                                              license to any other patent with one or                 tollers designated by BASF) to any other               property, inventory, office furniture,
                                              more claims covering the combination                    intellectual property, registration data,              materials, supplies, and other tangible
                                              of clothianidin, Bacillus firmus strain I–              technology, know-how, or other rights                  property; all transferable licenses,
                                              1582, or Bacillus thuringiensis strain EX               used in the manufacture or formulation                 permits, product registrations and
                                              297512 with another active ingredient,                  of any current or pipeline product                     regulatory submissions (including
                                              for BASF to combine clothianidin,                       divested as part of the Seed Treatment                 supporting data), certifications, and
                                              Bacillus firmus strain I–1582, or                       Business; and                                          authorizations issued by or submitted to


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                                              27662                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                              any governmental organization; all                      this matter or ninety (90) calendar days               relevant certifications, job performance
                                              contracts, teaming arrangements,                        after receiving all international antitrust            evaluations, and current salary and
                                              agreements, leases, commitments,                        approvals required for the transfer of the             benefits information to enable BASF to
                                              certifications, and understandings,                     Divestiture Assets, Bayer and Monsanto                 make offers of employment. If Bayer is
                                              including supply agreements; all                        are ordered and directed to divest the                 barred by any applicable laws from
                                              customer lists, accounts, credit records,               Divestiture Assets to BASF in a manner                 providing any of this information to
                                              and transferable customer contracts; all                consistent with this Final Judgment.                   BASF, within ten (10) business days of
                                              other business and administrative                       The United States, in its sole discretion,             receiving BASF’s request, Bayer shall
                                              records; seed production facilities;                    may agree to one or more extensions of                 provide the requested information to the
                                              breeding stations; all research and                     this period not to exceed sixty (60)                   greatest extent possible under
                                              development facilities; all germplasm;                  calendar days in total and shall notify                applicable laws and also provide a
                                              and all breeding data, including, but not               this Court in such circumstances.                      written explanation of its inability to
                                              limited to, phenotype, genotype,                        Defendants agree to use their best efforts             comply fully with BASF’s request for
                                              molecular markers, and performance                      to divest the Divestiture Assets as                    information regarding Relevant
                                              data; and                                               expeditiously as possible.                             Personnel.
                                                 (2) all intangible assets owned,                        B. Bayer shall permit BASF to have                     (2) Upon request, Bayer shall make
                                              licensed, controlled, or used by the                    reasonable access to personnel and to                  Relevant Personnel available for
                                              Vegetable Seed Business, including, but                 make inspections of the facilities to be               interviews with BASF during normal
                                              not limited to, all patents, plant variety              acquired by BASF; access to any and all                business hours at a mutually agreeable
                                              certificates, licenses and sublicenses,                 environmental, zoning, and other permit                location. Bayer will not interfere with
                                              intellectual property, copyrights,                      documents and information; and access                  any negotiations by BASF to employ
                                              trademarks, trade names, service marks,                 to any and all financial, operational, or              any Relevant Personnel. Interference
                                              service names, technical information,                   other documents and information                        includes but is not limited to offering to
                                              computer software and related                           customarily provided as part of a due                  increase the salary or benefits of
                                              documentation, know-how, trade                          diligence process.                                     Relevant Personnel other than as part of
                                              secrets, drawings, blueprints, designs,                    C. Bayer and Monsanto shall not take                a company-wide increase in salary or
                                              design protocols, specifications for                    any action that will impede in any way                 benefits granted in the ordinary course
                                              materials, specifications for parts and                 the permitting, operation, or divestiture              of business.
                                              devices, safety procedures for the                      of the Divestiture Assets.                                (3) For any Relevant Personnel who
                                              handling of materials and substances,                      D. Unless the United States otherwise               elect employment with BASF, Bayer
                                              quality assurance and control                           consents in writing, the divestitures                  shall waive all non-compete and non-
                                              procedures, design tools and simulation                 pursuant to Section IV of this Final                   disclosure agreements (except as noted
                                              capability, manuals and technical                       Judgment shall include the entire                      in Paragraph IV(E)(5)), vest all unvested
                                              information provided by Bayer to its                    Divestiture Assets and shall be                        pension and other equity rights, and
                                              own employees, customers, suppliers,                    accomplished in such a way as to satisfy               provide all benefits which Relevant
                                              agents, or licensees; and research data                 the United States, in its sole discretion,             Personnel would be provided if
                                              concerning historical and current                       that the Divestiture Assets can and will               transferred to a buyer of an ongoing
                                              research and development efforts,                       be used by BASF as part of the viable,                 business.
                                              including, but not limited to, designs of               ongoing operation of the Divestiture                      (4) For a period of two (2) years from
                                              experiments and the results of                          Businesses. The divestitures shall be                  the date of filing of the Complaint in
                                              successful and unsuccessful designs and                 accomplished so as to satisfy the United               this matter, Bayer may not solicit to
                                              experiments.                                            States, in its sole discretion, that none              hire, or hire, any such person who was
                                                 Notwithstanding Paragraphs II(AA)(1)                 of the terms of any agreement between                  hired by BASF, unless (a) such
                                              and II(AA)(2) above, the Vegetable Seed                 BASF and Bayer and Monsanto give                       individual is terminated or laid off by
                                              Divestiture Assets do not include the                   Bayer and Monsanto the ability                         BASF or (b) BASF agrees in writing that
                                              thirty-four (34) office facilities identified           unreasonably to raise BASF’s costs, to                 Bayer may solicit or hire that
                                              in Appendix A, Paragraph 4, or                          lower BASF’s efficiency, or otherwise to               individual.
                                              trademarks, trade names, service marks,                 interfere in the ability of BASF to                       (5) Nothing in Paragraph IV(E) shall
                                              or service names containing the name                    compete effectively.                                   prohibit Bayer from maintaining any
                                              ‘‘Bayer.’’                                                 E. Employees                                        reasonable restrictions on the disclosure
                                                 BB. ‘‘Yield and Stress Collaboration’’                  (1) Within ten (10) business days                   by any employee who accepts an offer
                                              means any agreement between                             following the filing of the Complaint in               of employment with BASF of Bayer’s
                                              Monsanto and BASF existing as of the                    this matter, Bayer shall provide to                    proprietary non-public information that
                                              date of filing of the Complaint in this                 BASF, the United States, and the                       is (a) not otherwise required to be
                                              matter related to a collaboration to                    Monitoring Trustee, organization charts                disclosed by this Final Judgment, (b)
                                              develop yield and stress traits for row                 covering every person providing any                    related solely to Bayer’s businesses and
                                              crops.                                                  support for the Divestiture Businesses                 clients, and (c) unrelated to the
                                                                                                      for each year since January 1, 2015.                   Divestiture Assets.
                                              III. APPLICABILITY                                      Within ten (10) business days of                          (6) BASF’s right to hire Relevant
                                                 This Final Judgment applies to                       receiving a request from BASF, Bayer                   Personnel pursuant to Section IV(E) and
                                              Defendants and all other persons in                     shall provide to BASF, the United                      Bayer’s obligations under Paragraph
                                              active concert or participation with any                States, and the Monitoring Trustee,                    IV(E)(1), Paragraph IV(E)(2), and
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                                              of them who receive actual notice of this               additional information related to                      Paragraph IV(E)(3) shall last for a period
                                              Final Judgment by personal service or                   identified Relevant Personnel, including               of one (1) year after the Divestiture
                                              otherwise.                                              name, job title, reporting relationships,              Closing Date.
                                                                                                      Hay points, past experience,                              F. Asset Warranties
                                              IV. DIVESTITURES                                        responsibilities from January 1, 2015                     (1) In addition to any other warranties
                                                A. By the later of ninety (90) calendar               through the Divestiture Closing Date,                  in the divestiture-related agreements
                                              days after the filing of the Complaint in               training and educational history,                      entered into by Defendants, Bayer and


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                                                                           Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices                                             27663

                                              Monsanto shall warrant to BASF (a) that                 conditions of any such agreement must                  option of BASF, on or before the
                                              each asset will be operational as of the                be reasonably related to market                        Divestiture Closing Date, Bayer shall
                                              Divestiture Closing Date; (b) that, for                 conditions for the supply of seed                      enter into one or more tolling
                                              each of the Divestiture Assets, there are               treatments. Upon BASF’s request, the                   agreements with BASF for the
                                              no material defects in the                              United States, in its sole discretion, may             formulation, filling, and packaging of
                                              environmental, zoning, or other permits                 approve one or more extensions of any                  the seed treatments divested as part of
                                              pertaining to the operation of each asset;              such agreement for a total of up to an                 the Clothianidin Seed Treatment
                                              (c) that following the sale of each of the              additional two (2) years. The United                   Business and the Fluopyram Seed
                                              Divestiture Assets, Bayer will not                      States, in its sole discretion, shall                  Treatment Business for an initial period
                                              undertake, directly or indirectly, any                  determine whether supply pursuant to                   of up to two (2) years. Bayer will toll
                                              challenges to the environmental, zoning,                any such extension must be at variable                 these products for BASF at variable cost,
                                              or other permits related to the operation               cost.                                                  in priority over other purchasers, and in
                                              of each of the Divestiture Assets; and (d)                 (2) Isoxaflutole Supply Agreement: At               the quantities demanded by BASF
                                              the Divestiture Assets are sufficient in                the option of BASF, on or before the                   under any such agreement until the
                                              all material respects for BASF, taking                  Divestiture Closing Date, Bayer shall                  expiration of that agreement. All other
                                              into account BASF’s assets and                          enter into one or more agreements with                 terms and conditions of any such
                                              business, to maintain the viability and                 BASF for the supply of isoxaflutole to                 agreement must be reasonably related to
                                              competitiveness of the Divestiture                      be used on crops that are isoxaflutole-                market conditions for the formulation,
                                              Businesses.                                             tolerant as a result of genetic                        filling, and packaging of seed
                                                 (2) In addition to any other remedial                modification for an initial period of two              treatments. Upon BASF’s request, the
                                              provisions in the divestiture-related                   (2) years. Bayer will supply BASF with                 United States, in its sole discretion, may
                                              agreements entered into by Defendants,                  formulated isoxaflutole and the                        approve one or more extensions of any
                                              for a period of up to one (1) year                      isoxaflutole active ingredient at variable             such agreement for a total of up to an
                                              following the Divestiture Closing Date,                 cost, in priority over other purchasers,               additional two (2) years. The United
                                              if BASF determines that any assets not                  and in the quantities demanded by                      States, in its sole discretion, shall
                                              included in the Divestiture Assets were                 BASF under any such agreement until                    determine whether tolling pursuant to
                                              previously used by the Divestiture                      the expiration of that agreement. All                  any such extension must be at variable
                                              Businesses and are reasonably necessary                 other terms and conditions of any such                 cost.
                                              for the continued competitiveness of the                agreement must be reasonably related to                   (5) Clothianidin Active Ingredient
                                              Divestiture Businesses, it shall notify                 market conditions for the supply of                    Tolling Agreement: At the option of
                                              the United States, the Monitoring                       herbicides and the active ingredients in               BASF, on or before the Divestiture
                                              Trustee, and Bayer in writing that it                   herbicides. Upon BASF’s request, the                   Closing Date, Bayer shall enter into one
                                              requires such assets. The United States,                United States, in its sole discretion, may             or more tolling agreements with BASF
                                              in its sole discretion, taking into                     approve one or more extensions of any                  for the supply of the active ingredients
                                              account BASF’s assets and business,                     such agreement for a total of up to an                 used in the seed treatments divested as
                                              shall determine whether any of the                      additional four (4) years. The United                  part of the Clothianidin Seed Treatment
                                              assets identified should be divested to                 States, in its sole discretion, shall                  Business for an initial period of up to
                                              BASF. If the United States determines                   determine whether supply pursuant to                   two (2) years. Bayer will toll these active
                                              that such assets should be divested,                    any such extension must be at variable                 ingredients for BASF at variable cost, in
                                              Bayer and BASF will negotiate an                        cost.                                                  priority over other purchasers, and in
                                              agreement within thirty (30) calendar                      (3) Tolling Agreement for Glufosinate               the quantities demanded by BASF
                                              days providing for the divestiture of                   Ammonium: At the option of BASF, on                    under any such agreement until the
                                              such assets in a period to be determined                or before the Divestiture Closing Date,                expiration of that agreement. All other
                                              by the United States in consultation                    Bayer shall enter into one or more                     terms and conditions of any such
                                              with Bayer and BASF. The terms of any                   tolling agreements with BASF for the                   agreement must be reasonably related to
                                              such divestiture agreement shall be                     formulation, filling, and packaging of                 market conditions for the tolling of
                                              commercially reasonable and must be                     glufosinate ammonium products for an                   active ingredients used in seed
                                              acceptable to the United States, in its                 initial period of up to two (2) years.                 treatments. Upon BASF’s request, the
                                              sole discretion.                                        Bayer will formulate, fill, and package                United States, in its sole discretion, may
                                                 G. Supply and Tolling Agreements                     glufosinate ammonium products for                      approve one or more extensions of any
                                                 (1) Seed Treatment Supply                            BASF at variable cost, in priority over                such agreement for a total of up to an
                                              Agreements for Broad Acre Seeds and                     other purchasers, and in the quantities                additional four (4) years. The United
                                              Traits Business: At the option of BASF,                 demanded by BASF under any such                        States, in its sole discretion, shall
                                              on or before the Divestiture Closing                    agreement until the expiration of that                 determine whether tolling pursuant to
                                              Date, Bayer shall enter into one or more                agreement. All other terms and                         any such extension must be at variable
                                              agreements with BASF for the supply of                  conditions of any such agreement must                  cost.
                                              the Bayer seed treatments (except the                   be reasonably related to market                           (6) Fluopyram Active Ingredient
                                              seed treatments divested as part of the                 conditions for the formulation, filling,               Tolling Agreement: At the option of
                                              Clothianidin Seed Treatment Business                    and packaging of herbicides. Upon                      BASF, on or before the Divestiture
                                              or Fluopyram Seed Treatment Business)                   BASF’s request, the United States, in its              Closing Date, Bayer shall enter into a
                                              used by Bayer in the Broad Acre Seeds                   sole discretion, may approve one or                    tolling agreement with BASF for the
                                              and Traits Business for an initial period               more extensions of any such agreement                  supply of the fluopyram active
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                                              of up to two (2) years. Bayer will supply               for a total of up to an additional one (1)             ingredient for an initial period of up to
                                              BASF with these seed treatments at                      year. The United States, in its sole                   two (2) years. Bayer will toll this active
                                              variable cost, in priority over other                   discretion, shall determine whether                    ingredient for BASF at variable cost, in
                                              purchasers, and in the quantities                       tolling pursuant to any such extension                 priority over other purchasers, and in
                                              demanded by BASF under any such                         must be at variable cost.                              the quantities demanded by BASF
                                              agreement until the expiration of that                     (4) Tolling Agreement for Divested                  under any such agreement until the
                                              agreement. All other terms and                          Seed Treatment Formulations: At the                    expiration of that agreement. All other


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                                              27664                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                              terms and conditions of any such                           (1) Transition Services Agreements for              to allow BASF to operate any
                                              agreement must be reasonably related to                 Information Technology Support: At the                 Divestiture Assets or to facilitate the
                                              market conditions for the tolling of                    option of BASF, on or before the                       transfer of Bayer facilities to BASF.
                                              active ingredients used in seed                         Divestiture Closing Date, Bayer shall                  Unless specifically excepted elsewhere
                                              treatments. Upon BASF’s request, the                    enter into one or more transition                      in this Final Judgment, Bayer will
                                              United States, in its sole discretion, may              services agreements to provide                         provide transition services under any
                                              approve one or more extensions of any                   information technology services and                    such agreement for an initial period of
                                              such agreement for a total of up to an                  support for the Divestiture Assets for an              up to two (2) years and on price terms
                                              additional four (4) years. The United                   initial period of up to one (1) year.                  no worse than at variable cost until the
                                              States, in its sole discretion, shall                   Bayer will provide the transition                      expiration of the agreement. All other
                                              determine whether tolling pursuant to                   services under any such agreement at no                terms and conditions of any such
                                              any such extension must be at variable                  cost to BASF until the expiration of the               agreement must be reasonably related to
                                              cost.                                                   agreement. All other terms and                         market conditions for the provision of
                                                 (7) Reverse-Tolling Agreement for                    conditions of any such agreement must                  the relevant services. Upon BASF’s
                                              Bayer Products: At the option of Bayer,                 be reasonably related to market                        request, the United States, in its sole
                                              on or before the Divestiture Closing                    conditions for the provision of the                    discretion, may approve one or more
                                              Date, BASF shall enter into a reverse-                  relevant services. Upon BASF’s request,                extensions of any such agreement for a
                                              tolling agreement with Bayer for the                    the United States, in its sole discretion,             total of up to an additional one (1) year.
                                              formulation, filling, and packaging of                  may approve one or more extensions of                     (5) The terms and conditions of all
                                              the Bayer products manufactured at the                  this agreement for a total of up to an                 agreements reached between Bayer and
                                              Regina, Canada formulation facility that                additional one (1) year.                               BASF under Paragraph IV(H) must be
                                              is part of the Glufosinate Ammonium                        (2) Bayer Warranty of Transition                    acceptable to the United States, in its
                                              Divestiture Assets for an initial period                Services Provided by Tata Consultancy                  sole discretion. Any amendments or
                                              of up to two (2) years. All terms and                   Services: Bayer has contracted with a                  modifications of the agreements may be
                                              conditions of any such agreement must                   third-party vendor, Tata Consultancy                   entered into only with the approval of
                                              be reasonably related to market                         Services, to create interim, stand-alone               the United States, in its sole discretion.
                                              conditions for the formulation, filling,                information and business support                       Bayer shall perform all duties and
                                              and packaging of these crop protection                  systems for some components of the                     provide all services required of Bayer
                                              products. Upon Bayer’s request, the                     Divestiture Assets. Bayer shall warrant                under the agreements reached between
                                              United States, in its sole discretion, may              to BASF that the systems developed by                  Bayer and BASF under Paragraph IV(H).
                                              approve one or more extensions of such                  Tata Consultancy Services will be                         (6) BASF will use best efforts to
                                              agreement for a total of up to an                       operational on the Divestiture Closing                 develop alternative solutions by the end
                                              additional six (6) months.                              Date and support operations of the                     of the initial periods identified in
                                                 (8) Other Supply and Tolling                         relevant components of the Divestiture                 Paragraph IV(H) for transition services
                                              Agreements: At the option of BASF, on                   Assets in a manner that is substantially               agreements and will continue to use
                                              or before the Divestiture Closing Date,                 consistent with prior operations of these              best efforts during any extension period.
                                              Bayer and BASF shall enter into any                     businesses. Except for de minimis                         (7) Bayer will use best efforts to
                                              other supply, reverse-supply, tolling, or               deficiencies, Bayer shall use best efforts             develop alternative solutions by the end
                                              reverse-tolling agreements reasonably                   to take all necessary actions to correct               of the initial periods identified in
                                              necessary to allow BASF to operate any                  expeditiously any deficiencies                         Paragraph IV(H) for reverse-transition
                                              Divestiture Assets or to facilitate the                 inconsistent with this warranty and                    services agreements and will continue
                                              transfer of Bayer facilities to BASF.                   shall be solely responsible for all costs              to use best efforts during any extension
                                                 (9) The terms and conditions of all                  incurred in resolving the deficiencies,                period.
                                              agreements reached between Bayer and                    including by paying Tata Consultancy                      I. Clothianidin Licenses Back: At the
                                              BASF under Paragraph IV(G) must be                      Services’s fees.                                       option of Bayer, BASF shall enter into
                                              acceptable to the United States, in its                    (3) Distribution Agreements for                     an agreement to provide Bayer the
                                              sole discretion. Any amendment or                       Glufosinate Ammonium and Divested                      following licenses:
                                              modification of such agreements may be                  Seed Treatment Products: At the option                    (1) a worldwide, exclusive, royalty-
                                              entered into only with the approval of                  of BASF, on or before the Divestiture                  free, paid-up license to the rights
                                              the United States, in its sole discretion.              Closing Date, Bayer shall enter into one               transferred to BASF in Paragraph
                                              Bayer shall perform all duties and                      or more agreements to distribute on                    II(X)(3) for (a) all non-seed treatment
                                              provide all services required of Bayer                  BASF’s behalf products containing                      uses of clothianidin, (b) all uses of
                                              under the agreements reached between                    glufosinate ammonium, clothianidin,                    active ingredients other than
                                              Bayer and BASF under Paragraph IV(G).                   Bacillus firmus strain I–1582, or                      clothianidin, Bacillus firmus strain I–
                                                 (10) BASF will use best efforts to                   fluopyram outside the United States.                   1582, or Bacillus thuringiensis strain EX
                                              develop or procure alternative sources                  BASF shall terminate any such                          297512, and (c) combinations of active
                                              of supply by the end of the initial                     agreement within one (1) year. Upon                    ingredients that do not include
                                              periods identified in Paragraph IV(G) for               BASF’s request, the United States, in its              clothianidin, Bacillus firmus strain I–
                                              supply and tolling agreements and will                  sole discretion, may approve one or                    1582, or Bacillus thuringiensis strain EX
                                              continue to use best efforts during any                 more extensions of the period for BASF                 297512; and
                                              extension period.                                       to terminate any such agreement for a                     (2) a worldwide, non-exclusive,
                                                 (11) Bayer will use best efforts to                  total of up to an additional one (1) year.             royalty-free, paid-up license to the
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                                              develop or procure alternative sources                     (4) Other Transition Services                       rights transferred to BASF in Paragraphs
                                              of supply by the end of the initial                     Agreements: At the option of BASF, on                  II(X)(3) and II(X)(4) for the use of
                                              periods identified in Paragraph IV(G) for               or before the Divestiture Closing Date,                clothianidin in any Bayer seed
                                              reverse-supply and reverse-tolling                      Bayer shall enter into other transition                treatment mixture product for canola/
                                              agreements and will continue to use                     services or reverse transition services                oilseed rape, potatoes, sugarbeets,
                                              best efforts during any extension period.               agreements to provide any other                        cereals, and vegetables that has been
                                                 H. Transition Services                               transition services reasonably necessary               commercialized by Bayer as of the date


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                                                                           Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices                                             27665

                                              of the filing of the Complaint in this                  period, for a total of up to an additional             such agreement reached between Bayer
                                              matter (except Poncho/VOTiVO, Poncho                    six (6) months, for BASF to satisfy this               and BASF.
                                              Plus, and Poncho Super).                                requirement. BASF will make best
                                                 J. Digital Agriculture License Back:                                                                        V. FINANCING
                                                                                                      efforts to obtain such licenses,
                                              At the option of Bayer, BASF shall enter                registrations, and permits as                             Neither Bayer nor Monsanto shall
                                              into an agreement to provide Bayer a                    expeditiously as possible.                             finance all or any part of any purchase
                                              non-exclusive, royalty-free, paid-up                       (2) Bayer will make best efforts to                 made pursuant to Section IV of this
                                              license to the Digital Agriculture                      assist BASF with acquiring new                         Final Judgment.
                                              Divestiture Assets for the limited                      licenses, registrations, and permits to                VI. HOLD SEPARATE AND ASSET
                                              purpose of allowing Bayer to sell                       support the Divestiture Businesses and,                PRESERVATION
                                              outside North America the following                     until BASF has the necessary licenses,
                                              digital agriculture products: Expert.com                registrations, and permits, Bayer will                   Until all the divestitures required by
                                              web application; Weedscout mobile                       provide BASF with the benefit of                       this Final Judgment have been fully
                                              application; Xarvio FieldManager web                    Bayer’s licenses, registrations, and                   accomplished, Defendants shall take all
                                              application; Xarvio FieldManager                        permits in BASF’s operation of the                     steps necessary to comply with the
                                              mobile application; and Xarvio Scouting                 Divestiture Assets.                                    Stipulation and Order entered by this
                                              mobile application. This license shall                     (3) Bayer will globally maintain all                Court. Defendants shall take no action
                                              not give Bayer (1) any rights to any                    product registrations for isoxaflutole,                that would jeopardize any divestiture
                                              improvements made by BASF to the                        fluopyram, and any other retained                      ordered by this Court.
                                              Digital Agriculture Divestiture Assets or               product registrations related to the                   VII. AFFIDAVITS
                                              (2) any rights to use any trademarks or                 Divestiture Businesses, and Bayer will
                                              brand names divested as part of the                     make best efforts to obtain regulatory                    A. Within twenty (20) calendar days
                                              Digital Agriculture Divestiture Assets,                 approvals for isoxaflutole formulations                of the filing of the Complaint in this
                                              including, but not limited to,                          used on isoxaflutole-tolerant cotton and               matter, and every thirty (30) calendar
                                              Expert.com, Weedscout, or Xarvio.                       soybeans.                                              days thereafter until the divestitures
                                                 K. Third-Party Agreements: At BASF’s                    M. Modification of Monsanto-BASF                    have been accomplished under Section
                                              option, on or before the Divestiture                    Yield and Stress Collaboration: The                    IV, Bayer and Monsanto shall deliver to
                                              Closing Date, Bayer shall assign or                     Yield and Stress Collaboration will be                 the United States and the Monitoring
                                              otherwise transfer to BASF all                          modified consistent with the following:                Trustee an affidavit, signed by each of
                                              transferable or assignable agreements, or               (1) Defendants shall not contribute any                Bayer’s and Monsanto’s Chief Financial
                                              any assignable portions thereof, related                more genes to the Yield and Stress                     Officer and General Counsel, which
                                              to the Divestiture Assets, including, but               Collaboration; (2) the Yield and Stress                shall describe the fact and manner of
                                              not limited to, all customer contracts,                 Collaboration will continue as before                  Bayer’s and Monsanto’s compliance
                                              licenses, and collaborations. Bayer shall               with respect to genes or events in the                 with Section IV. Assuming the
                                              use best efforts to expeditiously obtain                three active research and development                  information set forth in the affidavit is
                                              from any third parties any consent                      projects, except that BASF will receive                true and complete, any objection by the
                                              necessary to transfer or assign to BASF                 a license with stacking rights to use in               United States to information provided
                                              all agreements related to the Divestiture               its own seeds any Yield and Stress                     by Bayer and Monsanto, including
                                              Assets. To the extent consent cannot be                 Collaboration trait commercialized by                  limitation on information, shall be made
                                              obtained and the agreement is not                       Monsanto, on terms acceptable to the                   within fourteen (14) calendar days of
                                              otherwise assignable, in addition to the                United States, in its sole discretion; (3)             receipt of such affidavit.
                                              existing mitigation rules agreed upon                   both Bayer and BASF shall receive (a)                     B. Within twenty (20) calendar days
                                              between Bayer and BASF, Bayer shall                     copies of all other genes and related                  of the filing of the Complaint in this
                                              use best efforts to obtain for BASF, as                 research records in the Yield and Stress               matter, each of the Defendants shall
                                              expeditiously as possible, the full                     Collaboration regardless of crop, and (b)              deliver to the United States and the
                                              benefit of any such agreement as it                     non-exclusive research, development,                   Monitoring Trustee an affidavit that
                                              relates to the Divestiture Businesses by                breeding, and commercialization rights                 describes in reasonable detail all actions
                                              assisting BASF to secure a new                          to these genes in any crop with no cost,               it has taken and all steps it has
                                              agreement and by taking any other steps                 revenue, or profit sharing; and (4) the                implemented on an ongoing basis to
                                              necessary to ensure that BASF obtains                   terms related to DroughtGard shall be                  comply with this Final Judgment and
                                              the full benefit of the agreement as it                 unchanged.                                             the Stipulation and Order. Each of the
                                              relates to the Divestiture Businesses.                     N. Monsanto Midwest Soybean                         Defendants shall deliver to the United
                                              Bayer will not assert, directly or                      Germplasm: At the option of BASF, on                   States and the Monitoring Trustee an
                                              indirectly, any legal claim that would                  or before the Divestiture Closing Date,                affidavit describing any changes to the
                                              interfere with BASF’s ability to obtain                 Bayer and Monsanto shall enter into one                efforts and actions outlined in its earlier
                                              the full benefit from any transferred                   or more agreements facilitating the                    affidavits filed pursuant to this Final
                                              third-party agreement to the same extent                transfer and licensing of the Midwest                  Judgment within fifteen (15) calendar
                                              enjoyed by Bayer prior to the transfer.                 Soybean Germplasm Divestiture Assets.                  days after the change is implemented.
                                                 L. Licenses, Registrations, and                      The terms and conditions of any such                      C. In addition to providing affidavits
                                              Permits                                                 agreement reached between Bayer and                    to the United States and the Monitoring
                                                 (1) Where necessary, BASF will apply                 Monsanto and BASF must be acceptable                   Trustee as required under Paragraph
                                              for licenses, registrations, and permits                to the United States, in its sole                      VII(A) and Paragraph VII(B), Defendants
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                                              that support the Divestiture Businesses                 discretion. Any amendment or                           shall immediately notify the United
                                              to replace those held by Bayer as                       modification of any such agreement may                 States and the Monitoring Trustee
                                              expeditiously as possible and, in any                   be entered into only with the approval                 verbally and in writing of any potential
                                              event, no later than six (6) months from                of the United States, in its sole                      problems or delays in meeting any of
                                              the Divestiture Closing Date. The United                discretion. Bayer and Monsanto shall                   the obligations set forth in this Final
                                              States, in its sole discretion, may                     perform all duties and provide all                     Judgment and the Stipulation and
                                              approve one or more extensions of this                  services required of them under any                    Order.


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                                              27666                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                                 D. Bayer and Monsanto shall keep all                 after the action taken by the Monitoring               appropriate, this Court. To the extent
                                              records of all efforts made to preserve                 Trustee giving rise to the Defendants’                 that any such report contains
                                              and divest each of the Divestiture Assets               objection.                                             information that the Monitoring Trustee
                                              until one year after such divestitures                     E. The Monitoring Trustee shall serve               deems confidential, that report shall not
                                              have been completed. BASF shall keep                    at Bayer’s cost and expense pursuant to                be filed in the public docket of this
                                              all records of all efforts made to acquire              a written agreement with Bayer and on                  Court.
                                              each of the Divestiture Assets until one                such terms and conditions as the United                   I. The Monitoring Trustee shall audit
                                              year after such divestitures have been                  States approves, in its sole discretion,               Defendants’ compliance with Section IX
                                              completed.                                              including confidentiality requirements                 every six (6) months. Defendants will
                                                                                                      and conflict of interest certifications.               provide full access to any documents
                                              VIII. APPOINTMENT OF                                    The compensation of the Monitoring                     and make employees available for
                                              MONITORING TRUSTEE                                      Trustee and any consultants,                           interviews requested by the Monitoring
                                                 A. Upon filing of this Final Judgment,               accountants, attorneys, and other agents               Trustee pursuant to performing the
                                              the United States may, in its sole                      retained by the Monitoring Trustee shall               semi-annual audit. The Monitoring
                                              discretion, appoint a Monitoring                        be on reasonable and customary terms                   Trustee shall file a report of the audit
                                              Trustee, subject to approval by this                    commensurate with the individuals’                     with the United States and, as
                                              Court.                                                  experience and responsibilities. If the                appropriate, this Court. To the extent
                                                 B. The Monitoring Trustee shall have                 Monitoring Trustee and Bayer are                       that any such report contains
                                              the power and authority to monitor                      unable to reach agreement on the                       information that the Monitoring Trustee
                                              Defendants’ compliance with the terms                   Monitoring Trustee’s or any agents’ or                 deems confidential, that report shall not
                                              of this Final Judgment and the                          consultants’ compensation or other                     be filed in the public docket of this
                                              Stipulation and Order entered by this                   terms and conditions of engagement                     Court.
                                              Court, and shall have such other powers                 within fourteen (14) calendar days of                     J. The Monitoring Trustee shall serve
                                              as this Court deems appropriate. The                    appointment of the Monitoring Trustee,                 until the sale of the Divestiture Assets
                                              Monitoring Trustee shall investigate and                the United States may, in its sole                     is finalized pursuant to Section IV and
                                              report on Defendants’ compliance with                   discretion, take appropriate action,                   the expiration of any agreement entered
                                              their respective obligations under, and                 including making a recommendation to                   into pursuant to Paragraph IV(G) or
                                              efforts to effectuate the purposes of, this             this Court. The Monitoring Trustee                     Paragraph IV(H) or other agreements
                                              Final Judgment and the Stipulation and                  shall, within three (3) business days of               between Bayer and BASF that may
                                              Order, including, but not limited to,                   hiring any consultants, accountants,                   affect the accomplishment of the
                                              reviewing (1) the implementation and                    attorneys, or other agents, provide                    purposes of this Final Judgment, unless
                                              execution of the compliance plan                        written notice of such hiring and the                  the United States, in its sole discretion,
                                              required by Section IX, and (2) any                     rate of compensation to Bayer and the                  terminates earlier or extends this period.
                                              claimed breach by Bayer of any                          United States.                                            K. If the United States determines that
                                              agreement entered into pursuant to                         F. The Monitoring Trustee shall have                the Monitoring Trustee has ceased to act
                                              Paragraph IV(G) or Paragraph IV(H). If                  no responsibility or obligation for the                or failed to act diligently or in a
                                              the Monitoring Trustee determines that                  operation of Defendants’ businesses.                   reasonably cost-effective manner, it may
                                              any violation of the Final Judgment or                     G. Defendants shall use their best                  recommend this Court appoint a
                                              the Stipulation and Order or breach of                  efforts to assist the Monitoring Trustee               substitute Monitoring Trustee.
                                              any related agreement has occurred, the                 in monitoring Defendants’ compliance
                                              Monitoring Trustee shall recommend an                   with their individual obligations under                IX. FIREWALL
                                              appropriate remedy to the United States,                this Final Judgment and the Stipulation                   A. During the term of any agreement
                                              which, in its sole discretion, can accept,              and Order. The Monitoring Trustee and                  entered into pursuant to Paragraph
                                              modify, or reject a recommendation to                   any consultants, accountants, attorneys,               IV(G) or Paragraph IV(H), Bayer and
                                              pursue a remedy.                                        and other agents retained by the                       BASF shall implement and maintain
                                                 C. Subject to Paragraph VIII(E), the                 Monitoring Trustee shall have full and                 reasonable procedures to prevent
                                              Monitoring Trustee may hire at Bayer’s                  complete access to the personnel, books,               Shared Confidential Information from
                                              cost and expense any consultants,                       records, and facilities related to                     being disclosed by or through
                                              accountants, attorneys, or other agents                 compliance with this Final Judgment                    implementation and execution of these
                                              reasonably necessary in the Monitoring                  and the Stipulation and Order, subject                 agreements to components or
                                              Trustee’s judgment and who shall be                     to reasonable protection for trade secret              individuals within the respective
                                              solely accountable to the Monitoring                    or other confidential research,                        companies involved in the marketing,
                                              Trustee. Any such consultants,                          development, or commercial                             distribution, or sale of competing
                                              accountants, attorneys, or other agents                 information or any applicable                          products.
                                              shall serve on such terms and                           privileges. Defendants shall take no                      B. Bayer and BASF each shall, within
                                              conditions as the United States                         action to interfere with or to impede the              twenty (20) business days of the entry
                                              approves, in its sole discretion,                       Monitoring Trustee’s accomplishment of                 of the Stipulation and Order, submit to
                                              including confidentiality requirements                  its responsibilities.                                  the United States and the Monitoring
                                              and conflict of interest certifications.                   H. After its appointment, the                       Trustee a document setting forth in
                                                 D. Defendants shall not object to                    Monitoring Trustee shall file reports                  detail the procedures implemented to
                                              actions taken by the Monitoring Trustee                 monthly until all the Divestiture Assets               effect compliance with Section IX. Upon
                                              in fulfillment of the Monitoring                        have been divested and thereafter as                   receipt of the document, the United
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                                              Trustee’s responsibilities under any                    frequently as the United States                        States shall notify Bayer and BASF
                                              order of this Court on any ground other                 determines, in its sole discretion, setting            within twenty (20) business days
                                              than the Monitoring Trustee’s                           forth Defendants’ compliance with their                whether, in its sole discretion, it
                                              malfeasance. Any such objections by                     obligations under this Final Judgment                  approves of or rejects each party’s
                                              Defendants must be conveyed in writing                  and under the Stipulation and Order.                   compliance plan. In the event that
                                              to the United States and the Monitoring                 The Monitoring Trustee shall file such                 Bayer’s or BASF’s compliance plan is
                                              Trustee within ten (10) calendar days                   reports with the United States and, as                 rejected, the United States shall provide


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                                                                           Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices                                             27667

                                              Bayer or BASF, as applicable, the                       consultants and other persons retained                 IV(F)(2), BASF may not acquire from
                                              reasons for the rejection. Bayer or BASF,               by the United States, shall, upon written              Bayer during the term of this Final
                                              as applicable, shall be given the                       request of an authorized representative                Judgment any assets or businesses that
                                              opportunity to submit, within ten (10)                  of the Assistant Attorney General in                   compete with the Divestiture Assets. In
                                              business days of receiving a notice of                  charge of the Antitrust Division, and on               addition, Bayer and BASF shall not,
                                              rejection, a revised compliance plan. If                reasonable notice to Defendants, be                    without the prior written consent of the
                                              Bayer or BASF cannot agree with the                     permitted:                                             United States, enter into any new
                                              United States on a compliance plan, the                 (1) access during Defendants’ office hours to          Collaboration involving any of the
                                              United States shall have the right to                     inspect and copy, or at the option of the            Divestiture Assets or expand the scope
                                              request that this Court rule on whether                   United States, to require Defendants to              of any existing Collaboration involving
                                              Bayer’s and BASF’s proposed                               provide hard copy or electronic copies of,           any of the Divestiture Assets during the
                                                                                                        all books, ledgers, accounts, records, data,
                                              compliance plan fulfills the                                                                                   term of this Final Judgment. The United
                                                                                                        and documents in the possession, custody,
                                              requirements of Section IX.                               or control of Defendants, related to any             States will notify Bayer and BASF of its
                                                 C. Bayer and BASF shall:                               matters contained in this Final Judgment;            decision within sixty (60) calendar days
                                                 (1) furnish a copy of this Final                       and                                                  of receiving written notification from
                                              Judgment and related Competitive                        (2) to interview, either informally or on the          Bayer and BASF of the proposed new or
                                              Impact Statement within sixty (60)                        record, Defendants’ officers, employees, or          expanded Collaboration. The decision
                                              calendar days of entry of the Final                       agents, who may have their individual                whether or not to consent to a
                                              Judgment to (a) each officer, director,                   counsel present, regarding such matters.             Collaboration shall be within the sole
                                              and any other employee that will                          The interviews shall be subject to the               discretion of the United States.
                                              receive Shared Confidential                               reasonable convenience of the interviewee
                                              Information; and (b) each officer,                        and without restraint or interference by             XII. NOTIFICATION OF FUTURE
                                              director, and any other employee that is                  Defendants.                                          TRANSACTIONS
                                              involved in (i) any contacts with the                      B. Upon the written request of an                      A. For transactions that are not
                                              other companies that are parties to any                 authorized representative of the                       subject to the reporting and waiting
                                              agreement entered into pursuant to                      Assistant Attorney General in charge of                period requirements of the Hart-Scott-
                                              Paragraph IV(G) or Paragraph IV(H), or                  the Antitrust Division, Defendants shall               Rodino Antitrust Improvements Act of
                                              (ii) making decisions under any                         submit written reports or responses to                 1976, as amended, 15 U.S.C. § 18a (the
                                              agreement entered into pursuant to                      written interrogatories, under oath if                 ‘‘HSR Act’’), Bayer and Monsanto shall
                                              Paragraph IV(G) or Paragraph IV(H);                     requested, related to any of the matters               not, without providing advanced
                                                 (2) furnish a copy of this Final                     contained in this Final Judgment as may                notification to the United States,
                                              Judgment and related Competitive                        be requested.                                          directly or indirectly acquire a financial
                                              Impact Statement to any successor to a                     C. No information or documents                      interest, including through securities,
                                              person designated in Paragraph IX(C)(1)                 obtained by the means provided in                      loan, equity, or management interest, in
                                              upon assuming that position;                            Section X shall be divulged by the                     any company that researches, develops,
                                                 (3) annually brief each person                       United States to any person other than                 manufactures, or sells digital agriculture
                                              designated in Paragraph IX(C)(1) and                    an authorized representative of the                    products or soybean, cotton, canola, or
                                              Paragraph IX(C)(2) on the meaning and                   executive branch of the United States,                 corn seeds or traits. In addition, Bayer
                                              requirements of this Final Judgment and                 except in the course of legal proceedings              and Monsanto shall not acquire any
                                              the antitrust laws; and                                 to which the United States is a party                  digital agriculture assets, any trait
                                                 (4) obtain from each person                          (including grand jury proceedings), or                 assets, or all or substantially all of the
                                              designated in Paragraph IX(C)(1) and                    for the purpose of securing compliance                 germplasm assets from any such
                                              Paragraph IX(C)(2), within thirty (30)                  with this Final Judgment, or as                        company without providing advanced
                                              calendar days of that person’s receipt of               otherwise required by law.                             notification to the United States.
                                              the Final Judgment, a certification that                   D. If at the time information or                       B. Such notification shall be provided
                                              he or she (a) has read and, to the best                 documents are furnished by Defendants                  to the United States in the same format
                                              of his or her ability, understands and                  to the United States, Defendants shall                 as, and per the instructions relating to,
                                              agrees to abide by the terms of this Final              represent and identify in writing the                  the Notification and Report Form set
                                              Judgment; (b) is not aware of any                       material in any such information or                    forth in the Appendix to Part 803 of
                                              violation of the Final Judgment that has                documents to which a claim of                          Title 16 of the Code of Federal
                                              not been reported to the company; and                   protection may be asserted under Rule                  Regulations as amended, except that the
                                              (c) understands that any person’s failure               26(c)(l)(G) of the Federal Rules of Civil              information requested in Items 5
                                              to comply with this Final Judgment may                  Procedure and mark each pertinent page                 through 8 of the instructions must be
                                              result in an enforcement action for civil               of such material, ‘‘Subject to claim of                provided only about digital agriculture
                                              or criminal contempt of court against                   protection under Rule 26(c)(l)(G) of the               products or soybean, cotton, canola, or
                                              each Defendant or any person who                        Federal Rules of Civil Procedure,’’ then               corn seeds or traits. Notification shall be
                                              violates this Final Judgment.                           the United States shall give Defendants                provided at least thirty (30) calendar
                                                                                                      ten (10) calendar days’ notice prior to                days prior to acquiring any such
                                              X. COMPLIANCE INSPECTION                                                                                       interest, and shall include, beyond what
                                                                                                      divulging such material in any legal
                                                A. For the purposes of determining or                 proceeding (other than a grand jury                    may be required by the applicable
                                              securing compliance with this Final                     proceeding).                                           instructions, the names of the principal
                                              Judgment, or of any related orders such                                                                        representatives of the parties to the
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                                              as any Stipulation and Order, or of                     XI. NO REACQUISITION OR                                agreement who negotiated the
                                              determining whether the Final                           RECOMBINATION OF                                       agreement, and any management or
                                              Judgment should be modified or                          DIVESTITURE ASSETS                                     strategic plans discussing the proposed
                                              vacated, and subject to any legally                       Bayer may not reacquire any part of                  transaction. If within thirty (30)
                                              recognized privilege, from time to time                 the Divestiture Assets during the term of              calendar days after notification, the
                                              authorized representatives of the United                this Final Judgment. Except for an                     United States makes a written request
                                              States Department of Justice, including                 acquisition pursuant to Paragraph                      for additional information, Bayer and


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                                              27668                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                              Monsanto shall not consummate the                          C. In any enforcement proceeding in                 Sanliurfa), Ukraine (Kiev), and the United
                                              proposed transaction or agreement until                 which the Court finds that the                         States (Champaign, Clayton, and Inaha).
                                              thirty (30) calendar days after                         Defendants have violated this Final                    2. Bayer will retain one seed cleaning and
                                              submitting and certifying, in the manner                Judgment, the United States may apply                  bagging facility that is part of Bayer Crop
                                              described in Part 803 of Title 16 of the                to the Court for a one-time extension of               Science headquarters in Monheim, Germany
                                                                                                      this Final Judgment, together with such                (known as ‘‘EOPC’’).
                                              Code of Federal Regulations as
                                              amended, the truth, correctness, and                    other relief as may be appropriate. In                 3. Bayer will retain fourteen (14) formulation
                                                                                                      connection with any successful effort by               and filling sites largely dedicated to non-
                                              completeness of all such additional
                                                                                                                                                             divested Bayer products in Argentina
                                              information. Early termination of the                   the United States to enforce this Final                (Zarate), Australia (Kwinana and Pinkenba),
                                              waiting periods in this paragraph may                   Judgment against a Defendant, whether                  Brazil (Belford Roxo), China (Hangzhou),
                                              be requested and, where appropriate,                    litigated or resolved prior to litigation,             Colombia (Barranquilla), Germany
                                              granted in the same manner as is                        that Defendant agrees to reimburse the                 (Frankfurt), Guatemala (Amatitlán), Japan
                                              applicable under the requirements and                   United States for any attorneys’ fees,                 (Hofu), Korea (Daejeon), South Africa (Nigel),
                                              provisions of the HSR Act and rules                     experts’ fees, and costs incurred in                   Spain (Quart de Poblet), Thailand (Bangpoo),
                                              promulgated thereunder. Section XII                     connection with that enforcement effort,               and the United States (Kansas City).
                                              shall be broadly construed and any                      including the investigation of the                     4. Bayer will retain thirty-four (34) general
                                              ambiguity or uncertainty regarding the                  potential violation.                                   office facilities largely dedicated to non-
                                              filing of notice under Section XII shall                                                                       divested businesses in Algeria (Algiers),
                                                                                                      XV. EXPIRATION OF FINAL                                Argentina (Munro), Australia (Pinkenba),
                                              be resolved in favor of filing notice.
                                                                                                      JUDGMENT                                               Belgium (Diegem), Canada (Guelph), Chile
                                              XIII. RETENTION OF                                                                                             (Santiago de Chile), Colombia (Bogotá), Costa
                                              JURISDICTION                                               Unless this Court grants an extension,              Rica (San José), Denmark (Copenhagen),
                                                                                                      this Final Judgment shall expire ten (10)              Egypt (Cairo), Germany (Monheim), Great
                                                 This Court retains jurisdiction to                   years from the date of its entry, except               Britain (Saffron Walden), Guatemala (Mixco),
                                              enable any party to this Final Judgment                 that after six (6) years from the date of              Hungary (Budapest), Iran (Tehran), Japan
                                              to apply to this Court at any time for                  its entry, this Final Judgment may be                  (Fukuoka), Kazakhstan (Astana), Kenya
                                              further orders and directions as may be                                                                        (Nairobi), Morocco (Casablanca and El
                                                                                                      terminated upon notice by the United
                                              necessary or appropriate to carry out or                                                                       Jadida), Panama (David), Peru (Ica and Lima),
                                                                                                      States to the Court and Defendants that                Poland (Warsaw), Portugal (Carnaxide),
                                              construe this Final Judgment, to modify                 the divestitures have been completed                   Romania (Bucharest), Russia (Krasnodar),
                                              any of its provisions, to enforce                       and that the continuation of the Final                 Singapore (Singapore), South Korea
                                              compliance, and to punish violations of                 Judgment no longer is necessary or in                  (Anseong-si), Spain (Paterna), Ukraine (Kiev),
                                              its provisions.                                         the public interest.                                   the United States (two sites in West
                                                                                                                                                             Sacramento), and Vietnam (Hanoi).
                                              XIV. ENFORCEMENT OF FINAL                               XVI. PUBLIC INTEREST
                                              JUDGMENT                                                DETERMINATION                                          Appendix B: Monsanto Population Numbers
                                                 A. The United States retains and                                                                            (1) JVK13764
                                                                                                         Entry of this Final Judgment is in the              (2) JVK13662
                                              reserves all rights to enforce the                      public interest. The parties have
                                              provisions of this Final Judgment,                                                                             (3) JVK13647
                                                                                                      complied with the requirements of the                  (4) JVK13604
                                              including its right to seek an order of                 Antitrust Procedures and Penalties Act,                (5) JVK13363
                                              contempt from this Court. Defendants                    15 U.S.C. § 16, including making copies                (6) JVK13294
                                              agree that in any civil contempt action,                available to the public of this Final                  (7) JVK13624
                                              any motion to show cause, or any                        Judgment, the Competitive Impact                       (8) JVK13564
                                              similar action brought by the United                    Statement, and any comments thereon                    (9) JVK13301
                                              States regarding an alleged violation of                and the United States’ responses to
                                                                                                                                                             (10) JVK13302
                                              this Final Judgment, the United States                                                                         (11) JVK13304
                                                                                                      comments. Based upon the record                        (12) JVK13303
                                              may establish a violation of this Final                 before this Court, which includes the
                                              Judgment and the appropriateness of                                                                            (13) JVK13305
                                                                                                      Competitive Impact Statement and any                   (14) JVK13306
                                              any remedy therefor by a preponderance                  comments and responses to comments                     (15) JVK13307
                                              of the evidence, and they waive any                     filed with this Court, entry of this Final             (16) JVK13279
                                              argument that a different standard of                   Judgment is in the public interest.                    (17) JVK13281
                                              proof should apply.                                                                                            (18) JVK13282
                                                                                                      Date:                                                  (19) JVK13283
                                                 B. The Final Judgment should be
                                              interpreted to give full effect to the                  [Court approval subject to procedures of               (20) JVK13278
                                                                                                      Antitrust Procedures and Penalties Act, 15             (21) JVK13280
                                              procompetitive purposes of the antitrust
                                                                                                      U.S.C. § 16]                                           (22) JVK13284
                                              laws and to restore all competition
                                              harmed by the challenged conduct.                         llllllllllllllllllll                                 (23) JVK13592
                                                                                                      United States District Judge                           (24) JVK13593
                                              Defendants agree that they may be held                                                                         (25) JVK13596
                                              in contempt of, and that the Court may                  Appendix A                                             (26) JVK13591
                                              enforce, any provision of this Final                    1. Bayer will retain thirty (30) office facilities     (27) JVK13594
                                              Judgment that, as interpreted by the                    largely dedicated to non-divested Bayer                (28) JVK13595
                                              Court in light of these procompetitive                  businesses in Argentina (Buenos Aires and              (29) JVK13598
                                              principles and applying ordinary tools                  Chacabuco), Brazil (Paulinia), Canada                  (30) JVK13205
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                                              of interpretation, is stated specifically               (Calgary, Ottawa, Rosthern, Saskatoon, and             (31) JVK13224
                                              and in reasonable detail, whether or not                Winnipeg), Czech Republic (Prague), France             (32) JVK13450
                                                                                                      (two sites in Lyon), Germany (Langenfeld and           (33) JVK13455
                                              it is clear and unambiguous on its face.                Monheim), Great Britain (Cambridge), Greece            (34) JVK13457
                                              In any such interpretation, the terms of                (Athens and Thessaloniki), Hungary                     (35) JVK13458
                                              the Final Judgment should not be                        (Budapest), Latvia (Riga), Poland (Warsaw),            (36) JVK13251
                                              construed against either party as the                   Romania (Bucharest), Russia (Moscow),                  (37) JVK13451
                                              drafter.                                                Turkey (Adana, Gebze, Istanbul, Izmir, and             (38) JVK13452



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                                                                           Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices                           27669

                                              (39) JVK13453                                           (115) JVK13617                                         (191) JVK13767
                                              (40) JVK13456                                           (116) JVK13618                                         (192) JVK13768
                                              (41) JVK13761                                           (117) JVK13619                                         (193) JVK13751
                                              (42) JVK13762                                           (118) JVK13692                                         (194) JVK13753
                                              (43) JVK13763                                           (119) JVK13699                                         (195) JVK13754
                                              (44) JVK13755                                           (120) JVK13207                                         (196) JVK13725
                                              (45) JVK13756                                           (121) JVK13230                                         (197) JVK13726
                                              (46) JVK13757                                           (122) JVK13259                                         (198) JVK13730
                                              (47) JVK13758                                           (123) JVK13574                                         (199) JVK13731
                                              (48) JVK13732                                           (124) JVK13576                                         (200) JVK13683
                                              (49) JVK13733                                           (125) JVK13577                                         (201) JVK13688
                                              (50) JVK13734                                           (126) JVK13578                                         (202) JVK13684
                                              (51) JVK13735                                           (127) JVK13579                                         (203) JVK13685
                                              (52) JVK13569                                           (128) JVK13582                                         (204) JVK13687
                                              (53) JVK13570                                           (129) JVK13434                                         (205) JVK13689
                                              (54) JVK13571                                           (130) JVK13428                                         (206) JVK13690
                                              (55) JVK13572                                           (131) JVK13429                                         (207) JVK13691
                                              (56) JVK13573                                           (132) JVK13430                                         (208) JVK13661
                                              (57) JVK13446                                           (133) JVK13431                                         (209) JVK13664
                                              (58) JVK13449                                           (134) JVK13432                                         (210) JVK13667
                                              (59) JVK13153                                           (135) JVK13433                                         (211) JVK13668
                                              (60) JVK13157                                           (136) JVK13435                                         (212) JVK13663
                                              (61) JVK13176                                           (137) JVK13204                                         (213) JVK13150
                                              (62) JVK13197                                           (138) JVK13216                                         (214) JVK13649
                                              (63) JVK13209                                           (139) JVK13370                                         (215) JVK13650
                                              (64) JVK13253                                           (140) JVK13371                                         (216) JVK13652
                                              (65) JVK13272                                           (141) JVK13372                                         (217) JVK13653
                                              (66) JVK13273                                           (142) JVK13373                                         (218) JVK13654
                                              (67) JVK13274                                           (143) JVK13375                                         (219) JVK13655
                                              (68) JVK13275                                           (144) JVK13376                                         (220) JVK13605
                                              (69) JVK13276                                           (145) JVK13377                                         (221) JVK13606
                                              (70) JVK13388                                           (146) JVK13378                                         (222) JVK13607
                                              (71) JVK13389                                           (147) JVK13374                                         (223) JVK13608
                                              (72) JVK13390                                           (148) JVK13504                                         (224) JVK13609
                                              (73) JVK13391                                           (149) JVK13505                                         (225) JVK13610
                                              (74) JVK13394                                           (150) JVK13506                                         (226) JVK13611
                                              (75) JVK13387                                           (151) JVK13507                                         (227) JVK13551
                                              (76) JVK13392                                           (152) JVK13508                                         (228) JVK13552
                                              (77) JVK13393                                           (153) JVK13509                                         (229) JVK13554
                                              (78) JVK13231                                           (154) JVK13510                                         (230) JVK13557
                                              (79) JVK13669                                           (155) JVK13503                                         (231) JVK13553
                                              (80) JVK13670                                           (156) JVK13702                                         (232) JVK13555
                                              (81) JVK13675                                           (157) JVK13703                                         (233) JVK13556
                                              (82) JVK13252                                           (158) JVK13700                                         (234) JVK13196
                                              (83) JVK13673                                           (159) JVK13701                                         (235) JVK13542
                                              (84) JVK13396                                           (160) JVK13707                                         (236) JVK13544
                                              (85) JVK13397                                           (161) JVK13258                                         (237) JVK13547
                                              (86) JVK13400                                           (162) JVK13459                                         (238) JVK13549
                                              (87) JVK13395                                           (163) JVK13460                                         (239) JVK13550
                                              (88) JVK13398                                           (164) JVK13461                                         (240) JVK13523
                                              (89) JVK13401                                           (165) JVK13462                                         (241) JVK13524
                                              (90) JVK13402                                           (166) JVK13463                                         (242) JVK13525
                                              (91) JVK13379                                           (167) JVK13464                                         (243) JVK13526
                                              (92) JVK13380                                           (168) JVK13465                                         (244) JVK13527
                                              (93) JVK13382                                           (169) JVK13466                                         (245) JVK13528
                                              (94) JVK13383                                           (170) JVK13257                                         (246) JVK13171
                                              (95) JVK13384                                           (171) JVK13408                                         (247) JVK13180
                                              (96) JVK13386                                           (172) JVK13410                                         (248) JVK13188
                                              (97) JVK13385                                           (173) JVK13404                                         (249) JVK13211
                                              (98) JVK13723                                           (174) JVK13405                                         (250) JVK13559
                                              (99) JVK13721                                           (175) JVK13406                                         (251) JVK13560
                                              (100) JVK13634                                          (176) JVK13407                                         (252) JVK13563
                                              (101) JVK13635                                          (177) JVK13409                                         (253) JVK13529
                                              (102) JVK13638                                          (178) JVK13353                                         (254) JVK13530
                                              (103) JVK13639                                          (179) JVK13354                                         (255) JVK13531
                                              (104) JVK13640                                          (180) JVK13355                                         (256) JVK13532
                                              (105) JVK13641                                          (181) JVK13357                                         (257) JVK13499
                                              (106) JVK13583                                          (182) JVK13356                                         (258) JVK13500
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                                              (107) JVK13584                                          (183) JVK13358                                         (259) JVK13501
                                              (108) JVK13585                                          (184) JVK13359                                         (260) JVK13502
                                              (109) JVK13586                                          (185) JVK13360                                         (261) JVK13471
                                              (110) JVK13587                                          (186) JVK13710                                         (262) JVK13472
                                              (111) JVK13588                                          (187) JVK13711                                         (263) JVK13473
                                              (112) JVK13590                                          (188) JVK13715                                         (264) JVK13474
                                              (113) JVK13612                                          (189) JVK13709                                         (265) JVK13476
                                              (114) JVK13615                                          (190) JVK13713                                         (266) JVK13477



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                                              27670                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                              (267) JVK13475                                          (343) JVK13743                                         (419) JVK13352
                                              (268) JVK13478                                          (344) JVK13744
                                              (269) JVK13416                                          (345) JVK13645                                         UNITED STATES DISTRICT COURT FOR
                                              (270) JVK13417                                          (346) JVK13646                                         THE DISTRICT OF COLUMBIA
                                              (271) JVK13420                                          (347) JVK13682                                         UNITED STATES DISTRICT COURT
                                              (272) JVK13421                                          (348) JVK13656
                                              (273) JVK13418                                          (349) JVK13625                                         FOR THE DISTRICT OF COLUMBIA
                                              (274) JVK13419                                          (350) JVK13626                                           United States of America, Plaintiff, v.
                                              (275) JVK13422                                          (351) JVK13621                                         BAYER AG, MONSANTO COMPANY, and
                                              (276) JVK13423                                          (352) JVK13599                                         BASF SE, Defendants.
                                              (277) JVK13424                                          (353) JVK13600
                                              (278) JVK13425                                          (354) JVK13602                                         Civil Action No.: 1:18–cv–1241
                                              (279) JVK13426                                          (355) JVK13603                                         Judge James E. Boasberg
                                              (280) JVK13427                                          (356) JVK13566
                                              (281) JVK13178                                          (357) JVK13567                                         COMPETITIVE IMPACT STATEMENT
                                              (282) JVK13182                                          (358) JVK13568
                                              (283) JVK13223                                          (359) JVK13533
                                                                                                                                                                Pursuant to Section 2(b) of the
                                              (284) JVK13361                                          (360) JVK13534                                         Antitrust Procedures and Penalties Act
                                              (285) JVK13362                                          (361) JVK13535                                         (‘‘APPA’’ or ‘‘Tunney Act’’), 15 U.S.C.
                                              (286) JVK13367                                          (362) JVK13536                                         § 16(b), Plaintiff United States of
                                              (287) JVK13369                                          (363) JVK13537                                         America files this Competitive Impact
                                              (288) JVK13364                                          (364) JVK13512                                         Statement relating to the proposed Final
                                              (289) JVK13366                                          (365) JVK13514                                         Judgment submitted on May 29, 2018,
                                              (290) JVK13323                                          (366) JVK13515                                         for entry in this civil antitrust
                                              (291) JVK13325                                          (367) JVK13513
                                                                                                                                                             proceeding.
                                              (292) JVK13327                                          (368) JVK13516
                                              (293) JVK13330                                          (369) JVK13517                                         I. NATURE AND PURPOSE OF THE
                                              (294) JVK13326                                          (370) JVK13518                                         PROCEEDING
                                              (295) JVK13328                                          (371) JVK13519
                                              (296) JVK13256                                          (372) JVK13520                                            On September 14, 2016, Defendant
                                              (297) JVK13331                                          (373) JVK13494                                         Bayer AG (‘‘Bayer’’) agreed to acquire
                                              (298) JVK13332                                          (374) JVK13495                                         Defendant Monsanto Company
                                              (299) JVK13333                                          (375) JVK13496
                                              (300) JVK13335                                          (376) JVK13497
                                                                                                                                                             (‘‘Monsanto’’) in a merger valued at
                                              (301) JVK13336                                          (377) JVK13498                                         approximately $66 billion. The United
                                              (302) JVK13334                                          (378) JVK13490                                         States filed a civil antitrust Complaint
                                              (303) JVK13341                                          (379) JVK13491                                         against Bayer and Monsanto on May 29,
                                              (304) JVK13342                                          (380) JVK13492                                         2018, seeking to enjoin the proposed
                                              (305) JVK13308                                          (381) JVK13493                                         merger. The Complaint alleges that the
                                              (306) JVK13309                                          (382) JVK13467                                         proposed merger would lessen
                                              (307) JVK13310                                          (383) JVK13469                                         competition substantially across various
                                              (308) JVK13311                                          (384) JVK13479                                         markets in the agricultural industry,
                                              (309) JVK13312                                          (385) JVK13480
                                              (310) JVK13158                                          (386) JVK13481
                                                                                                                                                             resulting in higher prices, less
                                              (311) JVK13295                                          (387) JVK13482                                         innovation, fewer choices, and lower-
                                              (312) JVK13297                                          (388) JVK13483                                         quality products for American farmers
                                              (313) JVK13298                                          (389) JVK13484                                         and consumers, in violation of Section
                                              (314) JVK13227                                          (390) JVK13486                                         7 of the Clayton Act, 15 U.S.C. § 18.
                                              (315) JVK13293                                          (391) JVK13487
                                                                                                                                                                Simultaneously with the filing of the
                                              (316) JVK13296                                          (392) JVK13488
                                              (317) JVK13300                                          (393) JVK13411                                         Complaint, the United States has filed a
                                              (318) JVK13313                                          (394) JVK13412                                         proposed Final Judgment and a
                                              (319) JVK13314                                          (395) JVK13413                                         Stipulation and Order designed to
                                              (320) JVK13315                                          (396) JVK13414                                         prevent the merger’s likely
                                              (321) JVK13316                                          (397) JVK13415                                         anticompetitive effects. As detailed
                                              (322) JVK13155                                          (398) JVK13436                                         below, the proposed Final Judgment
                                              (323) JVK13174                                          (399) JVK13437                                         requires Bayer to divest its businesses
                                              (324) JVK13185                                          (400) JVK13438                                         that compete with Monsanto, the seed
                                              (325) JVK13199                                          (401) JVK13440
                                                                                                                                                             treatment businesses that the merged
                                              (326) JVK13203                                          (402) JVK13441
                                              (327) JVK13225                                          (403) JVK13442                                         firm would use to harm competition in
                                              (328) JVK13320                                          (404) JVK13443                                         certain seed markets, and assets
                                              (329) JVK13321                                          (405) JVK13445                                         supporting those businesses
                                              (330) JVK13322                                          (406) JVK13194                                         (collectively, the ‘‘Divestiture Assets’’).
                                              (331) JVK13264                                          (407) JVK13254                                         Bayer has agreed to divest the
                                              (332) JVK13266                                          (408) JVK13348                                         Divestiture Assets to BASF SE
                                              (333) JVK13270                                          (409) JVK13540                                         (‘‘BASF’’), a global chemical company
                                              (334) JVK13271                                          (410) JVK13541                                         with a multi-billion-dollar crop
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                                              (335) JVK13285                                          (411) JVK13629
                                                                                                                                                             protection business.1 The required
                                              (336) JVK13286                                          (412) JVK13630
                                              (337) JVK13290                                          (413) JVK13632                                         divestitures will ensure that BASF
                                              (338) JVK13291                                          (414) JVK13633                                         replaces Bayer as an independent and
                                              (339) JVK13288                                          (415) JVK13344                                         vigorous competitor in each of the
                                              (340) JVK13746                                          (416) JVK13346
                                              (341) JVK13747                                          (417) JVK13347                                           1 Bayer, Monsanto, and BASF are referred to

                                              (342) JVK13750                                          (418) JVK13349                                         collectively as ‘‘Defendants.’’



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                                                                           Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices                                             27671

                                              markets in which the proposed merger                    B. The Competitive Effects of the                      leafy. In most cases, plant traits derive
                                              would otherwise lessen competition.                     Proposed Merger across Agricultural                    from the plant’s natural DNA; however,
                                                The terms of the Stipulation and                      Markets in the United States                           a small number of highly sophisticated
                                              Order require Defendants to take certain                   The Complaint alleges that the                      biotechnology firms can insert DNA
                                              steps to ensure that, pending the                       proposed merger would reduce                           from other organisms into the DNA of a
                                              required divestitures, all of the                       competition in the United States in 17                 plant, giving the plant a desirable trait
                                              Divestiture Assets will be preserved and                distinct agricultural product markets.                 associated with that non-native DNA. A
                                              that Monsanto will continue to be                                                                              GM seed is a seed that contains DNA,
                                                                                                      These markets fit into four broad
                                              operated independently as a separate                                                                           and hence a desirable trait, of a different
                                                                                                      categories: (1) genetically modified
                                              business concern.                                                                                              organism. Scientists have developed
                                                                                                      (‘‘GM’’) seeds and traits, (2)
                                                                                                                                                             herbicide-tolerant traits that give crops
                                                The United States and Defendants                      foundational herbicides, (3) seed
                                                                                                                                                             the ability to withstand exposure to
                                              have stipulated that the proposed Final                 treatments, and (4) vegetable seeds. In
                                                                                                                                                             herbicides that would normally damage
                                              Judgment may be entered after                           addition to anticompetitive effects in
                                                                                                                                                             or kill them, allowing a farmer to spray
                                              compliance with the APPA. Entry of the                  each of the product markets resulting
                                                                                                                                                             the herbicide over an entire field and
                                              proposed Final Judgment would                           from the loss of head-to-head
                                                                                                                                                             efficiently kill weeds without harming
                                              terminate this action, although the Court               competition or vertical foreclosure, the
                                                                                                                                                             the crop. Scientists also have developed
                                              would continue to retain jurisdiction to                Complaint also alleges that the merger                 traits that make crops resistant to certain
                                              construe, modify, or enforce the                        would have a significant impact on                     insect pests, allowing farmers to prevent
                                              provisions of the proposed Final                        innovation. Without the merger,                        these pests from damaging their crops
                                              Judgment and to punish violations                       competition between Bayer and                          while also reducing farmers’ use of
                                              thereof.                                                Monsanto would intensify as both                       chemical insecticides. Today, more than
                                                                                                      companies pursue what the industry                     90% of the soybeans, cotton, and canola
                                              II. DESCRIPTION OF THE EVENTS
                                                                                                      refers to as ‘‘integrated solutions’’—                 grown in the United States is grown
                                              GIVING RISE TO ALLEGED
                                                                                                      combinations of seeds, traits, and crop                from GM seeds.
                                              VIOLATION
                                                                                                      protection products, supported by
                                              A. The Defendants and the Merger                        digital farming technologies and other                 a) Relevant Markets
                                                                                                      services. Without the proposed Final                      As alleged in the Complaint, GM
                                                 Bayer is a life-sciences company
                                                                                                      Judgment, that competition would be                    cotton seeds, GM canola seeds, and GM
                                              based in Leverkusen, Germany. The
                                                                                                      lost.                                                  soybeans are each relevant product
                                              company employs nearly 100,000
                                              people worldwide and has operations in                  1. GM Seeds and Traits                                 markets under Section 7 of the Clayton
                                              nearly 80 countries. Bayer has three                                                                           Act. In canola and soy, nearly all GM
                                                                                                        Bayer and Monsanto are close                         seeds contain herbicide-tolerant traits,
                                              main business lines: (1)                                competitors in the GM seeds and traits
                                              pharmaceuticals, (2) consumer health,                                                                          but no seeds contain insect-resistant
                                                                                                      markets for three important U.S. row                   traits. In cotton, most GM seeds contain
                                              and (3) agriculture, the last of which is               crops: cotton, canola, and soybeans. As
                                              the Bayer Crop Science division. Over                                                                          both herbicide-tolerant traits and insect-
                                                                                                      described in the Complaint, the                        resistant traits (found on 98% and 88%
                                              the past decade, Bayer Crop Science has                 proposed merger would likely lead to a
                                              become one of the largest global                                                                               of all cotton acres, respectively). The
                                                                                                      substantial lessening of competition in                vast majority of farmers do not view
                                              agricultural firms. Today, its crop                     each of these markets, resulting in
                                              protection business is the second largest                                                                      conventional (i.e., non-GM) seeds as a
                                                                                                      hundreds of millions of dollars in harm                substitute for GM cotton, GM canola, or
                                              in the world, and its seeds and traits                  each year to American farmers and
                                              business is also among the world’s                                                                             GM soybeans because GM seeds
                                                                                                      consumers.                                             eliminate much of the labor and
                                              largest. Bayer Crop Science generated                     Cotton is a major crop grown across
                                              almost $12 billion in annual revenues in                                                                       expense associated with more
                                                                                                      the southern United States. Cotton seeds               traditional means of weed and pest
                                              2017.                                                   are widely used in vegetable oil,                      management, offer higher yields, and
                                                 Monsanto is a leading producer of                    packaged foods, and animal feed, and                   reduce soil erosion by decreasing tillage
                                              agricultural products based in St. Louis,               cotton fibers are widely used in                       requirements. Accordingly, a
                                              Missouri. Over 20,000 people work for                   clothing. In 2017, U.S. farmers planted                hypothetical monopolist of any of these
                                              the company in almost 70 countries.                     about 12 million acres of cotton                       GM seeds markets could profitably raise
                                              Monsanto’s innovative technologies                      accounting for over $800 million in seed               prices.
                                              have established it as a global leader in               purchases.                                                The Complaint also alleges that
                                              agriculture; today, it is the leading                     Canola is an important crop used in                  insect-resistant traits for cotton and
                                              global producer of seeds and traits and                 vegetable oil, packaged foods, biodiesel               herbicide-tolerant traits for cotton,
                                              is among the world’s largest producers                  fuels, and animal feed. In the United                  canola, and soybeans are relevant
                                              of crop protection products. In 2017,                   States, canola is grown on                             product markets under Section 7 of the
                                              Monsanto had almost $15 billion in                      approximately 1.7 million acres, mainly                Clayton Act. Again, the vast majority of
                                              annual revenues.                                        in North Dakota but also in several other              farmers growing cotton, canola, and
                                                 On September 14, 2016, Bayer agreed                  states. GM canola seeds accounted for                  soybeans in the United States choose to
                                              to acquire Monsanto for approximately                   $83 million in domestic sales in 2016.                 purchase GM seeds and do not consider
                                              $66 billion. In recognition of the                        Soy is the second-largest crop grown                 conventional seeds an acceptable
                                              significant competitive concerns raised                 in the United States. Soybeans are                     alternative. Consequently, GM traits are
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                                              by the proposed merger, Bayer has                       widely used in vegetable oil, packaged                 necessary inputs for most seed
                                              agreed to divest agricultural assets                    foods, and animal feed. In 2017, U.S.                  companies, and a hypothetical
                                              valued at approximately $9 billion to                   farmers planted almost 90 million acres                monopolist of any of the trait markets
                                              BASF. As discussed in Section III.K,                    of soybeans accounting for $4.64 billion               listed above could profitably raise
                                              infra, BASF has agreed to be bound by                   in seed purchases.                                     prices.
                                              the terms of the proposed Final                           A genetic trait is simply an attribute                  The Complaint alleges that the
                                              Judgment.                                               of a plant, such as being tall, short, or              relevant geographic markets for these


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                                              27672                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                              GM seeds and traits markets are regional                   Even these figures significantly                    season and access to a deep and diverse
                                              because seeds are tailored to local                     understate the level of dominance the                  collection of high-quality seeds for
                                              growing conditions (such as weather                     merged company would have in each of                   breeding future varieties. The varieties
                                              and soil type), and suppliers can charge                these markets. Monsanto licenses seeds                 must also be suitable for the particular
                                              different prices to customers in different              with traits to certain smaller seed                    geographic region. Elite seed varieties
                                              regions. In cotton and canola, however,                 companies (referred to in the industry as              suitable for regions in the United States
                                              virtually all of the regions affected by                ‘‘independent seed companies’’),                       are increasingly difficult to procure and
                                              the merger have similar market                          leaving these smaller rivals with limited              are controlled largely by a handful of
                                              conditions, so the regions can                          ability to exert competitive pressure on               vertically integrated companies,
                                              reasonably be aggregated to a national                  the merged firm.                                       including Monsanto, Bayer,
                                              level for purposes of analysis. For                                                                            DowDuPont, and Syngenta. In addition,
                                                                                                      c) Competitive Effects—GM Traits
                                              soybeans, the market structure differs                                                                         the time, expense, and expertise
                                              across regions, and the relevant                           In addition to effects in each GM seed              required to commercialize a GM trait is
                                              geographic market in which the merger                   market, the proposed merger would                      prohibitive for all but these four
                                              will lead to harm is the southern United                harm American farmers by eliminating                   companies. Although certain smaller
                                              States, where Bayer has focused its                     head-to-head competition between                       companies may participate in some
                                              soybean breeding program and been                       Bayer and Monsanto to develop and sell                 limited aspect of initially discovering a
                                              particularly successful.                                GM traits. These trait markets are even                trait, they do not have the ability to
                                                                                                      more highly concentrated than the GM                   commercialize these traits.
                                              b) Competitive Effects—GM Seeds                         seed markets. Bayer and Monsanto
                                                 The market for GM cotton seeds in the                effectively have a duopoly in cotton                   2. Foundational Herbicides
                                              United States is highly concentrated and                herbicide-tolerant traits, and the                        In addition to competing to sell
                                              would become significantly more so if                   proposed merger would lead to a                        herbicide-tolerant seeds, Bayer and
                                              Bayer were allowed to acquire                           monopoly. In 2017, Bayer’s herbicide-                  Monsanto also compete to sell the
                                              Monsanto. Bayer and Monsanto have                       tolerant cotton traits accounted for 19%               herbicides that are paired with them.
                                              long been the two leading suppliers of                  of the market, and Monsanto’s                          Monsanto’s Roundup Ready seeds are
                                              GM cotton seeds throughout the United                   accounted for 80%. The proposed                        engineered to tolerate the herbicide
                                              States. In addition to owning critical                  merger would also lead to a substantial                glyphosate, which Monsanto sells under
                                              herbicide-tolerant and insect-resistant                 increase in concentration in the market                its Roundup brands, while Bayer’s
                                              traits, discussed in more detail below,                 for canola herbicide-tolerant traits;                  LibertyLink seeds are engineered to
                                              the companies each own extensive                        virtually all canola seeds planted in the              tolerate glufosinate ammonium, the
                                              libraries of elite seed varieties, which                United States contain either a Bayer or                herbicide that Bayer sells under the
                                              are essential for breeding and                          a Monsanto trait. In the soybean                       Liberty brand. These ‘‘foundational’’
                                              commercializing competitive cotton                      herbicide-tolerant trait market, Bayer                 herbicides, glyphosate and glufosinate,
                                              seeds. If the proposed merger were                      has chipped away at Monsanto’s                         have unique characteristics that make
                                              allowed to proceed, Bayer and                           position, and the merger threatens to                  them important competitive alternatives
                                              Monsanto would have a combined 59%                      eliminate Monsanto’s only serious                      for farmers.
                                              share of GM cotton seeds in the United                  challenger. In 2017, Bayer and
                                                                                                                                                             a) Relevant Market
                                              States.                                                 Monsanto represented 14% and 67% of
                                                 In the market for GM canola seeds in                 the market, respectively, with the                       The Complaint alleges that
                                              the United States, Bayer and Monsanto                   remainder attributable to market                       foundational herbicides constitute a
                                              are by far the two largest competitors,                 participants using an off-patent version               relevant product market under Section 7
                                              with a combined share of approximately                  of Monsanto’s original Roundup Ready                   of the Clayton Act. Foundational
                                              74%. Bayer and Monsanto compete                         trait. Finally, the merger would also                  herbicides are herbicides used on row
                                              aggressively, and Bayer’s canola                        significantly increase concentration in                crops that have two defining
                                              innovations in recent years have                        the already highly concentrated market                 characteristics. First, they are ‘‘non-
                                              allowed it to surpass Monsanto,                         for insect-resistant traits for cotton;                selective,’’ meaning that they kill all
                                              previously the largest firm in this                     Bayer and Monsanto accounted for 10%                   types of weeds, thus providing farmers
                                              market.                                                 and 75% of that market, respectively, in               with the broadest possible protection for
                                                 In the market for GM soybeans, the                   2017.                                                  their crops. In contrast, other types of
                                              proposed merger would eliminate Bayer                      Without the merger, competition                     herbicides are ‘‘selective,’’ meaning that
                                              as a uniquely positioned challenger to                  between the two companies across the                   they kill only certain types of weeds.
                                              Monsanto, which has dominated the                       GM trait markets would likely increase                 Selective herbicides are often used to
                                              market since traits were first                          over time. Bayer and Monsanto each                     supplement non-selective herbicides but
                                              commercialized in soybeans in the                       have new traits in their research                      are not generally used in lieu of them.
                                              1990s. For years, Monsanto’s                            pipelines that would confer tolerance to               Second, foundational herbicides can be
                                              competitors relied on Monsanto for                      additional herbicides, and farmers                     paired with seeds that are engineered to
                                              licenses to GM traits and, in most cases,               would benefit as Bayer and Monsanto                    tolerate the herbicide. Other non-
                                              for licenses to seed varieties as well.                 continued to develop these new                         selective herbicides are not a substitute
                                              Bayer, however, invested over $250                      innovations.                                           for farmers because no seeds are
                                              million to develop an independent                                                                              engineered to withstand them, so
                                              source of soybean varieties and                         d) Entry and Expansion in GM                           spraying those herbicides over a crop
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                                              launched its own branded soybean                        Seeds and Traits Markets                               would damage it. For these reasons,
                                              business, Credenz, which sells varieties                   Entry is unlikely to counteract the                 farmers have no good substitutes for
                                              that perform well in the southern                       anticompetitive effects of the proposed                foundational herbicides, and a
                                              United States. In 2017, Monsanto had a                  merger in any of the GM seed or GM                     hypothetical monopolist would find it
                                              39% market share in that region, with                   trait markets. To compete in a GM seed                 profitable to increase the price of some
                                              Bayer holding a 6% share that it                        market, a company must have high-                      foundational herbicides by a small but
                                              planned to grow in the future.                          quality varieties for the current growing              significant amount. Today, glyphosate


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                                                                           Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices                                               27673

                                              and glufosinate are the only two                        treatments are applied to the majority of              most significant threat to Bayer’s
                                              foundational herbicides, but, as                        GM seeds sold in the United States                     dominance.
                                              discussed further below, new                            today. Multiple seed treatments can be
                                                                                                                                                             b) Vertical Foreclosure—Seed
                                              foundational herbicides are in                          applied to a seed to protect it from
                                                                                                                                                             Treatments for Corn Rootworm and
                                              development.                                            various threats; seed treatments
                                                                                                                                                             GM Corn Seeds
                                                                                                      designed for one purpose (e.g., killing
                                              b) Competitive Effects                                                                                            Corn is the largest crop grown in the
                                                                                                      insects) are rarely an effective substitute
                                                 The proposed merger would combine                    for seed treatments designed for a                     United States, accounting for over $8
                                              the world’s leading producers of                        different purpose (e.g., controlling                   billion in seed sales annually. Over 90%
                                              foundational herbicides and would lead                  fungal plant diseases).                                of U.S. corn seeds are genetically
                                              to a presumptively anticompetitive                         The Complaint alleges that the                      modified, and, like the other GM seeds
                                              increase in market concentration. Since                 proposed merger would likely result in                 discussed above, GM corn seeds are a
                                              the launch of herbicide-tolerant crops in               three forms of competitive harm related                relevant product market under Section 7
                                              the 1990s, Monsanto’s Roundup has                       to seed treatments: (1) the loss of head-              of the Clayton Act. Although Bayer does
                                              dominated the market. As some weeds                     to-head competition between Bayer’s                    not sell corn seeds, Monsanto effectively
                                              have developed resistance to                            and Monsanto’s seed treatments for                     controls 50% of the market and faces
                                              glyphosate, however, farmers are                        nematodes, (2) vertical foreclosure                    only one major rival.
                                              increasingly turning to Liberty. While                  effects resulting from the combination of                 Corn rootworm is a destructive pest
                                              glufosinate and glyphosate are now off                  Monsanto’s strong position in corn                     that can devastate a farmer’s fields. To
                                              patent, competition from generic                        seeds with Bayer’s substantial position                deal with this threat, some farmers rely
                                              suppliers has not prevented Bayer and                   in insecticidal seed treatments for corn               on Bayer’s Poncho insecticidal seed
                                              Monsanto from maintaining branded                       rootworm, and (3) vertical foreclosure                 treatment. For many farmers, there are
                                              price premiums. In 2017, Bayer held a                   effects resulting from the combination of              no cost-effective alternatives to
                                              7% share and Monsanto held a 53%                        Monsanto’s strong position in soybeans                 insecticidal seed treatments. Because
                                              share, with generic manufacturers                       with Bayer’s substantial position in                   Poncho is the only seed treatment that
                                              holding the remaining share.                            fungicidal seed treatments for soybean                 offers meaningful protection against
                                                 The proposed merger is also likely to                sudden death syndrome.                                 corn rootworm, corn seed companies
                                              eliminate competition between Bayer                                                                            purchase Bayer’s insecticidal seed
                                                                                                      a) Nematicidal Seed Treatments for                     treatment to apply to their seeds so they
                                              and Monsanto to develop next-
                                                                                                      Corn, Cotton, and Soybeans                             can offer a competitive product.
                                              generation weed management systems.
                                              The Complaint explains that Bayer is                       Nematicidal seed treatments protect                    The merger would likely harm
                                              developing new foundational herbicides                  crops from parasitic roundworms                        competition in the market for GM corn
                                              and related herbicide-tolerant traits that              known as nematodes. Farmers have no                    seeds by combining Monsanto’s strong
                                              would rival Monsanto’s Roundup                          cost-effective alternatives to nematicidal             position in GM corn seeds with Bayer’s
                                              Ready-based systems. Likewise,                          seed treatments. Seed treatments are                   dominant position in insecticidal seed
                                              Monsanto is actively pursuing                           approved for use by the government on                  treatments for corn rootworm. The
                                              innovations in foundational herbicides,                 a crop-by-crop basis, so a soybean                     merged firm would have the incentive
                                              including improvements to its Roundup                   farmer, for example, chooses between a                 and ability to make its corn seed rivals
                                              formulations. Absent the merger, Bayer                  different set of competitive alternatives              less competitive by forcing them to pay
                                              and Monsanto would each have                            than a cotton farmer. Accordingly, the                 more for Poncho or cutting off their
                                              incentives to pursue these competing                    Complaint alleges that nematicidal seed                supply of the product. This would limit
                                              pipeline products because any new                       treatments for corn, cotton, and soybean               farmers’ choices, reduce competition,
                                              innovations developed would help win                    seeds are each relevant markets under                  and ultimately allow the merged firm to
                                              market share from the other. In contrast,               Section 7 of the Clayton Act and that a                increase the price for GM corn seeds.
                                              the merged firm will have different                     hypothetical monopolist in each market
                                                                                                                                                             c) Vertical Foreclosure—Fungicidal
                                              incentives due to heightened concerns                   could profitably raise prices.
                                                                                                         All three nematicidal seed treatment                Seed Treatments for Sudden Death
                                              that new innovations would simply                                                                              Syndrome and GM Soybeans
                                              cannibalize sales.                                      markets are highly concentrated. For
                                                                                                      years, Bayer has had a monopoly in the                    The merger is likely to have similar
                                              c) Entry and Expansion                                  market for nematicidal seed treatments                 effects in soy. Sudden death syndrome
                                                As alleged in the Complaint, the                      for corn; in 2017, its market share was                (‘‘SDS’’) is a fungal disease afflicting
                                              anticompetitive effects of the proposed                 over 95%. Bayer also dominates the                     millions of soybean acres across the
                                              merger would not be remedied by entry                   market for nematicidal seed treatments                 United States. In 2015, Bayer began
                                              or expansion in the foundational                        for soybeans, with a share over 85%.                   selling ILeVO, the only effective
                                              herbicide market. The manufacture of                    And in the market for nematicidal seed                 fungicidal seed treatment combatting
                                              foundational herbicides is complex and                  treatments for cotton, Bayer and                       SDS, and ILeVO’s sales have doubled
                                              hazardous, requiring regulatory and                     Syngenta currently split the market                    annually since its introduction. The
                                              safety approvals, which are expensive                   roughly evenly.                                        merger is likely to reduce competition
                                              and time-consuming to secure.                              Although Monsanto does not                          by combining Monsanto’s leading GM
                                              Reputation, brand loyalty, and                          currently sell any nematicidal seed                    soybean business with Bayer’s dominant
                                              economies of scale also present barriers                treatments, it is about to launch its first            position in fungicidal seed treatments
                                              to entry and expansion.                                 product, NemaStrike. Without the                       for SDS. The merged firm would have
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                                                                                                      merger, both Bayer and Monsanto                        the incentive and ability to make its
                                              3. Seed Treatments                                      expected NemaStrike to capture                         soybean rivals less competitive by
                                                 Seed treatments are coatings applied                 significant share from Bayer in all three              charging them more for ILeVO or cutting
                                              to seeds that can protect the seed and                  seed treatment markets. The Complaint                  off their supply, diminishing
                                              the young plant from various insects or                 alleges that the proposed merger would                 competition in the market for GM
                                              diseases. Seed treatments are a critical                harm competition in the nematicidal                    soybeans and reducing choices available
                                              tool for farmers, and one or more seed                  seed treatment market by removing the                  to farmers.


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                                              27674                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                              d) Entry and Expansion                                  country, geographic markets are                        BASF, a global chemical company with
                                                 As alleged in the Complaint, the                     regional, but, similar to row crops,                   an existing agricultural crop protection
                                              anticompetitive effects of the proposed                 virtually all regions affected by the                  business. To ensure that BASF would
                                              merger would not be remedied by entry                   merger have similar market structure, so               replace Bayer as an effective competitor
                                              or expansion in the relevant seed                       in this case it is appropriate to aggregate            and innovator in each of the 17 markets
                                                                                                      these regions to the national level for                in which the Complaint alleges that the
                                              treatment markets. Developing a new,
                                                                                                      convenience.                                           proposed merger would harm
                                              effective seed treatment is a slow,
                                                                                                                                                             competition, the United States carefully
                                              costly, and difficult process, and new                  b) Competitive Effects
                                                                                                                                                             scrutinized the merging parties’ and
                                              seed treatments require extensive                          Bayer and Monsanto are among the                    BASF’s businesses and operations to
                                              regulatory approvals before farmers can                 largest domestic producers of all the                  identify a comprehensive package of
                                              use them. Generic versions of the Bayer                 vegetable seeds at issue. The Complaint                businesses and supporting assets for
                                              seed treatments discussed above will                    alleges that the proposed merger would                 divestiture. Collectively, these transfers
                                              not be available for at least the next                  significantly increase concentration in                encompass the suite of businesses and
                                              several years due to various intellectual               each market, and each market would be                  assets that constitute the divestiture
                                              property protections. Neither expansion                 highly concentrated with few, if any,                  package.
                                              by existing seed treatments nor new                     other significant competitors. In carrots                 In evaluating the remedy, the United
                                              seed treatments expected to launch in                   and cucumbers, the merged firm would                   States recognized that fully preventing
                                              the next several years would prevent the                enjoy near-complete dominance, with                    the competitive effects of a merger in
                                              anticompetitive effects of the proposed                 market shares of 94% and 90%,                          some cases requires the inclusion of
                                              merger.                                                 respectively. The combined company                     assets or projects that are beyond the
                                              4. Vegetables                                           would also have high market shares in                  affected relevant markets. As the U.S.
                                                                                                      onion seeds (71%) and tomato seeds                     Department of Justice Antitrust Division
                                                 Finally, the Complaint alleges that the              (55%). In watermelon seeds, Bayer                      Policy Guide to Merger Remedies
                                              proposed merger is likely to                            holds a 37% market share while                         explains, the United States will exercise
                                              substantially lessen competition in the                 Monsanto has a 6% share, with only one                 its enforcement discretion to accept a
                                              markets for five types of vegetable seeds:              other significant competitor. Monsanto’s               divestiture only when it is persuaded
                                              carrots, cucumbers, onions, tomatoes,                   market share in watermelon seeds                       that the divested ‘‘assets will create a
                                              and watermelons. Overall, Monsanto is                   understates its competitive significance;              viable entity that will effectively
                                              the largest global vegetable seed                       its recent introduction of competitive                 preserve competition.’’ See Antitrust
                                              company, while Bayer is the fourth                      seedless watermelon varieties, which                   Division Policy Guide to Merger
                                              largest, and the two companies are                      are in high demand and already offered                 Remedies at 9 (June 2011) (available at
                                              strong competitors in all five of these                 by Monsanto’s competitors, will likely                 https://www.justice.gov/atr/public/
                                              markets.                                                significantly improve its position going               guidelines/272350.pdf). Because Bayer
                                              a) Relevant Markets                                     forward. In each of these markets, the                 does not operate its businesses that
                                                                                                      proposed merger would eliminate the                    compete with Monsanto as separate,
                                                 The Complaint alleges that the seeds                 significant competition between Bayer                  standalone entities, to ensure effective
                                              markets for carrots, cucumbers, onions,                 and Monsanto, not only on price, but                   relief the United States is also requiring
                                              tomatoes, and watermelons each                          also on quality and innovation, to the                 the divestiture of assets that are
                                              constitute a relevant market under                      overall detriment of American farmers                  complementary to the competitive
                                              Section 7 of the Clayton Act. Each                      and consumers.                                         products or that use shared resources.
                                              vegetable species has unique                                                                                   See id. at 11 (‘‘[I]ntegrated firms can
                                              characteristics, and other crops are not                c) Entry and Expansion                                 provide scale and scope economies that
                                              viable substitutes. Many vegetable seed                   Firms that sell vegetable seeds use                  a purchaser may not be able to achieve
                                              customers rely on access to particular                  modern breeding techniques that                        by obtaining only those assets related to
                                              types of vegetables to operate their                    require access to advanced technologies                the relevant product(s).’’). Finally,
                                              businesses. For example, in the United                  and elite seed varieties, making entry                 effective relief also requires divestiture
                                              States, companies that sell pre-cut baby                challenging. In addition, entering a new               of those ‘‘pipeline’’ research projects
                                              carrots and other carrot products, such                 vegetable seed market can be expensive                 that Bayer is pursuing to ensure the
                                              as juice, purchase carrot seeds to grow                 and time consuming because successful                  future competitive significance of the
                                              their carrots. These companies are                      vegetable seed companies must invest                   divested businesses.
                                              unlikely to begin growing a different                   continuously in developing new,                           Guided by these principles, the
                                              crop in large quantities in response to a               improved varieties, some of which can                  United States identified a divestiture
                                              price increase. Nor are other farmers                   take over a decade to breed and                        package that remedies the various
                                              likely to switch crops in response to a                 commercialize. Certain vegetable                       dimensions of harm threatened by the
                                              price increase because they have                        markets present additional unique                      proposed merger. First, the proposed
                                              invested in crop-specific facilities and                challenges; for instance, onions are                   Final Judgment requires Bayer to divest
                                              equipment, possess specialized crop-                    among the hardest vegetable seeds to                   those businesses that vigorously
                                              specific knowledge, or live in an area                  produce, in part, because they are                     compete head-to-head with Monsanto
                                              best suited to growing that particular                  biennials, generating seed only every                  today. Second, to address certain
                                              type of vegetable. A hypothetical                       other growing season.                                  vertical concerns, the proposed Final
                                              monopolist of any of the five vegetable                                                                        Judgment requires Bayer to divest seed
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                                              seed species would find it profitable to                III. EXPLANATION OF THE                                treatment businesses that would give
                                              increase prices by at least a small but                 PROPOSED FINAL JUDGMENT                                the combined company the incentive
                                              significant amount because the bulk of                     The proposed Final Judgment                         and ability to harm competition by
                                              farmers would not switch away from                      remedies the anticompetitive effects of                raising the prices it charges rival seed
                                              their preferred vegetable crops in                      the merger by requiring Bayer to divest                companies. Third, because Bayer and
                                              response. As vegetable seeds are bred to                its businesses in each relevant market,                Monsanto compete to develop new
                                              thrive in particular regions of the                     along with various supporting assets, to               products and services for farmers, the


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                                                                           Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices                                            27675

                                              proposed Final Judgment requires the                    oversight over the divestitures to ensure              competitiveness of those businesses as
                                              divestiture of associated intellectual                  they proceed efficiently (see, infra,                  they are transitioned from Bayer.
                                              property and research capabilities,                     Section III.H). And, as additional                        First, the proposed Final Judgment
                                              including ‘‘pipeline’’ projects, to enable              protection, the proposed Final Judgment                requires divestiture of Bayer’s R&D
                                              BASF to replace Bayer as a leading                      includes robust mechanisms that will                   programs associated with wheat. Bayer
                                              innovator in the relevant markets.                      allow the United States and the Court to               does not currently sell wheat in the
                                              Fourth, the proposed Final Judgment                     monitor the effectiveness of the relief                United States, but it has been pursuing
                                              requires the divestiture of additional                  and to enforce compliance.                             wheat-related research to expand the
                                              assets that will give BASF the scale and                                                                       scope of its global seeds and traits
                                                                                                      A. GM Seeds and Traits                                 portfolio and sustain the level of R&D
                                              scope to compete effectively today and
                                              in the future.                                             Section IV of the proposed Final                    investment these businesses require.
                                                 Because many of the divested assets                  Judgment requires Bayer to divest all                  Because seed and trait innovations can
                                              will be separated from Bayer’s existing                 assets used by Bayer’s GM seeds and                    often be applied across multiple crops,
                                              business units and incorporated into                    traits businesses in the United States,                a broader seed and trait portfolio will
                                              BASF, the proposed Final Judgment                       including Bayer’s cotton, canola, and                  provide the promise of higher returns on
                                              includes provisions aimed at ensuring                   soybean seeds and traits businesses, as                investment and increase the incentive to
                                              that the assets are handed off in a                     well as almost all of the assets                       innovate. The proposed Final Judgment
                                              seamless and efficient manner. To that                  associated with Bayer’s other global GM                preserves the scope efficiencies that
                                              end, Bayer is required to transfer                      seeds and traits businesses. Because                   Bayer enjoys today by keeping these
                                              existing third-party agreements and                     Bayer and Monsanto are currently                       businesses together. Moreover,
                                              customer information to BASF, as well                   competing to introduce the next                        separating the wheat business from
                                              as to enter transition services                         blockbuster trait or plant variety, BASF               Bayer’s other seeds and traits businesses
                                              agreements that ensure that BASF can                    can replace Bayer as a competitor only                 would have required disentangling and
                                              continue to serve customers                             if BASF obtains all the assets required                dividing integrated operations and
                                              immediately upon completion of the                      to continue Bayer’s legacy of                          assets. For instance, Bayer’s research
                                              divestitures. The transition services and               innovation. This includes all assets                   facility in Ghent, Belgium is used to
                                              interim supply agreements are time-                     needed to offer farmers the new                        support R&D for wheat as well as other
                                              limited to ensure that BASF will                        products that Bayer was poised to                      crops. By requiring the divestiture of
                                              become fully independent of Bayer as                    commercialize in the coming years.                     Bayer’s wheat R&D programs and
                                              soon as practicable. The proposed Final                 Notably, BASF will receive all of                      related facilities, the proposed Final
                                              Judgment also requires Bayer to warrant                 Bayer’s trait research centers (including              Judgment ensures that BASF has all of
                                              that the assets being divested are                      facilities in Morrisville, North Carolina;             the tools needed to run the divested
                                              sufficient for BASF to maintain the                     Ghent, Belgium; and Astene, Belgium).                  businesses and can leverage these
                                              viability and competitiveness of the                    The proposed Final Judgment also                       common resources as effectively as
                                              divested businesses following BASF’s                    requires Bayer to transfer all intangible              Bayer does today.
                                              acquisition of the assets. In addition, it              assets used by these businesses, such as                  Second, under Paragraph IV.G of the
                                              gives BASF a one-year window after                      patents, know-how, and licenses or                     proposed Final Judgment, Bayer will
                                              closing to identify any additional assets               permits issued by government agencies.                 supply BASF with the seed treatments
                                              that are reasonably necessary to ensure                    There are limited exceptions to                     Bayer currently applies to its row crop
                                              the continued competitiveness of the                    Bayer’s obligation to divest all of the                seeds for a period of up to two years,
                                              divested businesses. The United States                  assets used by its global GM seeds and                 with extensions subject to approval by
                                              will have the sole discretion to                        traits businesses. Certain assets used                 the United States. This will allow BASF
                                              determine if Bayer must divest these                    exclusively to support a handful of                    to offer farmers the same combinations
                                              additional assets. Finally, the proposed                Bayer’s small seed businesses or                       of seeds and seed treatments that Bayer
                                              Final Judgment gives BASF the ability                   research programs outside of the United                offers today without interruption.
                                              to hire all of the personnel from Bayer                 States are excluded from the Divestiture               During the term of these supply
                                              needed to support these businesses.                     Assets. These exceptions are related to                agreements, BASF will transition to
                                                 BASF is the only buyer the United                    (1) rice seed, which Bayer sells only in               using (1) its own seed treatments, (2) the
                                              States has evaluated and deemed                         Asia; (2) Bayer’s millet, mustard, and                 seed treatments it is acquiring from
                                              suitable to resolve the range of                        cotton seed businesses in India; (3) R&D               Bayer pursuant to the proposed Final
                                              competitive concerns raised by the                      programs for Brazilian sugarcane and                   Judgment (discussed in more detail
                                              merger. BASF already has extensive                      European sugarbeets; and (4) Bayer’s                   below), (3) seed treatments from
                                              agricultural experience, but it lacks a                 cotton seed business in South Africa.                  alternate suppliers, or (4) a combination
                                              seeds and traits business. Combining the                None of these is closely related to the                thereof.
                                              businesses and assets being divested                    divested U.S. seeds and traits                            Third, Paragraph IV.N of the proposed
                                              with BASF’s existing portfolio will                     businesses. Bayer will also retain a                   Final Judgment requires Bayer to divest
                                              allow it to become an integrated player                 number of general office facilities that               certain groups of Monsanto soybeans
                                              and an effective industry competitor to                 house employees of businesses not                      used for research and breeding (referred
                                              the merged company and the other                        affected by the divestitures, as well as               to in the industry as ‘‘germplasm’’). As
                                              integrated players. BASF will have full                 one seed cleaning and bagging facility in              discussed in the Complaint, Bayer has
                                              control over these divested businesses,                 Germany that is part of Bayer’s Crop                   aggressively challenged Monsanto in the
                                              including the ability to assign licenses                Science headquarters.                                  soybean market, and planned to
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                                              and other rights.                                          The proposed Final Judgment also                    continue to expand. However, Bayer
                                                 In sum, the proposed remedies will                   requires Bayer to provide BASF with                    currently lacks soybeans suitable for the
                                              ensure that BASF can step into Bayer’s                  certain complementary assets, which                    Midwest, an important soybean growing
                                              shoes, thereby preserving the                           will give scale and scope benefits to the              region in the United States. By
                                              competition that the merger would                       divested GM seeds and traits businesses,               providing BASF with a richer pool of
                                              otherwise destroy. The monitoring                       and supply agreements, which will                      genetic material, the proposed Final
                                              trustee to be appointed will have close                 allow BASF to maintain the                             Judgment creates a strong incentive for


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                                              27676                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                              BASF to continue Bayer’s efforts to                     services, and BASF can terminate these                 that would arise both from the
                                              disrupt the market and provide new                      distribution contracts on a country-by-                horizontal combination of Bayer’s and
                                              benefits to farmers and consumers.                      country basis as soon as it is able to                 Monsanto’s nematicidal seed
                                                                                                      distribute these products on its own.                  treatments, as well as from the vertical
                                              B. Foundational Herbicides
                                                                                                                                                             integration of Bayer’s dominant seed
                                                 Section IV of the proposed Final                     C. Pipeline Herbicides
                                                                                                                                                             treatments and Monsanto’s dominant
                                              Judgment also requires Bayer to divest                     The proposed Final Judgment requires                seed businesses.
                                              assets relating to its foundational                     the divestiture of certain crop protection                First, the proposed Final Judgment
                                              herbicides business. The proposed Final                 products that are complementary to                     requires Bayer to divest all intellectual
                                              Judgment requires Bayer to divest all                   Bayer’s trait business. Today, Bayer                   property associated with its Poncho,
                                              intellectual property related to                        engages in parallel research across its                VOTiVO, and TWO.0 seed treatment
                                              glufosinate, the active ingredient in                   various seeds and crop protection                      brands. The Complaint alleges that the
                                              Bayer’s Liberty herbicide, including                    businesses, developing new herbicides                  merged firm could use its control over
                                              intellectual property relating to                       and new traits that confer tolerance to                Poncho, which is uniquely effective
                                              mixtures of glufosinate with other                      those herbicides. Bayer is motivated to                against corn rootworm, to disadvantage
                                              chemicals. Bayer is also required to                    pursue trait research in part because                  its corn seed rivals and diminish
                                              divest its R&D projects, which will                     successful commercialization of a trait                competition in the GM corn seed
                                              incentivize BASF to continue to develop                 will generate additional returns through               market. VOTiVO is an important
                                              new innovations for farmers.                            the sale of the associated herbicide, and              nematicidal seed treatment for corn,
                                                 In addition, Bayer will be required to               vice versa. Therefore, Section IV of the               soy, and cotton, and in combination
                                              divest all facilities used to manufacture               proposed Final Judgment also requires                  with other divestitures described below,
                                              glufosinate. Bayer will also divest                     Bayer to divest its R&D projects relating              its divestiture to BASF remedies the
                                              certain facilities used to ‘‘formulate’’                to ketoenole and N,O-chelator (‘‘NOC’’)                merger’s likely harm in the market for
                                              (i.e., mix with water and other inactive                herbicides. These herbicides, if                       nematicidal seed treatments. Because
                                              ingredients) and package glufosinate to                 successful, would be sold in                           VOTiVO and TWO.0 are each typically
                                              create Liberty for sale to customers.                   conjunction with the ketoenole- and                    sold in combination with Poncho,
                                              Specifically, the proposed Final                        NOC-tolerant traits Bayer is developing,               divestiture of the intellectual property
                                              Judgment requires Bayer to divest its                   which also are being divested. By                      associated with all three products will
                                              large North American facilities in                      requiring divestiture of both the trait                allow BASF to offer American farmers
                                              Regina, Canada and Muskegon,                            projects and the associated herbicide                  the same packages of Poncho-branded
                                              Michigan, which formulate and package                   projects, the proposed Final Judgment                  seed treatments as Bayer does today.
                                              a significant percentage of the Liberty                 preserves BASF’s incentive to pursue                      The proposed Final Judgment also
                                              sold in the United States. Because                      these innovations.                                     requires Bayer to divest intellectual
                                              Bayer’s global formulation facilities are                  The proposed Final Judgment also                    property associated with its ILeVO and
                                              also used for unrelated products not                    provides BASF full access to Bayer’s                   COPeO seed treatments, which are both
                                              being divested and supply very little of                Balance Bean herbicide. Bayer recently                 based on the same active ingredient,
                                              the Liberty used in the United States,                  introduced BalanceGT soybeans, which                   fluopyram. ILeVO and COPeO protect
                                              the proposed Final Judgment permits                     contain a GM trait conveying tolerance                 soybeans and cotton seeds, respectively,
                                              Bayer to retain some formulation                        to both glyphosate and isoxaflutole, a                 from nematodes; ILeVO is also the first
                                              facilities, most of which are located                   selective herbicide contained in Bayer’s               seed treatment to combat soybean SDS
                                              outside the United States. However,                     Balance Bean product. BalanceGT                        effectively. The ILeVO and COPeO
                                              Paragraph IV.G of the proposed Final                    soybeans are poised to compete with                    divestitures, in combination with the
                                              Judgment requires Bayer to enter into an                Monsanto’s herbicide-tolerant soybeans,                divestiture of VOTiVO, will address the
                                              agreement to formulate Liberty for                      but Balance Bean is not yet approved for               merger’s likely harm in the markets for
                                              BASF, at cost, for up to three years to                 spraying over the top of crops. The                    nematicidal seed treatments. The
                                              ensure that BASF can meet farmer                        proposed Final Judgment requires Bayer                 divestiture of ILeVO will also prevent
                                              demand for the product during the                       to transfer intellectual property                      Bayer from using its control over ILeVO
                                              transition. The proposed Final Judgment                 associated with its Balance Bean                       to disadvantage Monsanto’s soybean
                                              limits the duration of these formulation                herbicide business to BASF; Paragraph                  seed rivals and diminish competition in
                                              services to ensure that BASF will                       IV.G gives BASF the option of entering                 the market for GM soybean seeds, as
                                              become fully independent of Bayer as                    a temporary isoxaflutole supply                        alleged in the Complaint.
                                              soon as practicable.                                    agreement with Bayer; and Paragraph                       Bayer also will transfer all intellectual
                                                 In certain countries outside of the                  IV.L commits Bayer to using best efforts               property used by these divested seed
                                              United States, the proposed Final                       to obtain the remaining regulatory                     treatment businesses, including all
                                              Judgment also provides that Bayer will                  approvals for use of isoxaflutole over                 patents, licenses, know-how, trade
                                              distribute glufosinate products on                      the top of crops. These requirements                   names, and data or information
                                              BASF’s behalf for a limited period. This                ensure that BASF will have the same                    collected on the products. The only
                                              accommodation affects only a small                      ability to offer farmers the combination               exception is patents related to
                                              portion of total glufosinate sales and                  of both the BalanceGT trait and the                    fluopyram, which Bayer primarily uses
                                              ensures business continuity in those                    Balance Bean herbicide as Bayer would                  in other non-seed treatment products,
                                              international jurisdictions in which                    have if the merger had not occurred.                   such as fungicides applied to foliage.
                                              BASF requires time to develop the                                                                              Therefore, the proposed Final Judgment
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                                              business infrastructure or to secure the                D. Seed Treatments                                     requires Bayer to provide BASF with a
                                              local regulatory authorizations                           Section IV of the proposed Final                     perpetual, royalty-free license for all
                                              necessary to sell the product. To                       Judgment also requires Bayer to divest                 patents related to the use of fluopyram
                                              encourage BASF to become fully                          assets relating to its seed treatment                  in seed treatments. The proposed Final
                                              independent from Bayer as soon as                       businesses. Collectively, these                        Judgment also requires Bayer to divest
                                              practicable, the proposed Final                         divestitures remedy the likely                         all R&D projects associated with these
                                              Judgment limits the duration of these                   anticompetitive effects of the merger                  seed treatment products, as well as a


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                                                                           Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices                                           27677

                                              product in development that would                       Bayer’s worldwide headquarters in                      immediately after the divestitures are
                                              expand and improve on these existing                    Nunhem, Netherlands, and all global                    completed.
                                              seed treatment businesses.                              R&D facilities, sales offices, and                        The Monitoring Trustee will ensure:
                                                 Paragraph IV.G of the proposed Final                 operations centers. This will provide                  (1) that Defendants expeditiously
                                              Judgment requires Bayer, at BASF’s                      BASF with the necessary assets and                     comply with all of their obligations and
                                              option, to toll manufacture the active                  infrastructure to continue vigorously                  perform all of their responsibilities
                                              ingredients used in the divested seed                   competing, innovating, and developing                  under the proposed Final Judgment and
                                              treatments for an initial period of up to               new vegetable varieties. All customer                  the Stipulation and Order, (2) that the
                                              two years, and to provide formulation                   information, including lists, accounts,                Divestiture Assets remain economically
                                              and distribution services for the seed                  and credit records will also be                        viable, competitive, and ongoing
                                              treatments for up to two years. With                    transferred to ensure that existing                    businesses prior to being fully divested
                                              prior approval of the United States,                    customers receive uninterrupted                        to BASF, and (3) that competition in the
                                              certain of these arrangements may be                    service.                                               relevant businesses is maintained
                                              extended for up to an additional four                      Bayer also will divest intangible                   throughout the United States. The
                                              years. These agreements ensure that                     assets currently used by the vegetable                 Monitoring Trustee will have the power
                                              BASF can immediately replace Bayer as                   seed business. Critically, all intellectual            and authority to monitor the
                                              an effective competitor with the                        property—including patents, licenses,                  Defendants’ compliance with the terms
                                              divested seed treatments. BASF has its                  and copyrights—will be transferred to                  of the proposed Final Judgment. The
                                              own existing seed treatment businesses                  BASF. In addition, BASF will receive                   Monitoring Trustee also will have the
                                              and will use the time under the                         research data relating to historic and                 authority to investigate complaints
                                              agreements to prepare its own facilities                current R&D efforts. These divestitures                relating to Bayer and Monsanto’s
                                              to manufacture and distribute the seed                  will allow BASF to develop new and                     compliance with the proposed Final
                                              treatments, or to arrange for other                     innovative vegetable seeds for current                 Judgment including, but not limited to,
                                              suppliers to do so.                                     and future customers.                                  any complaints relating to the
                                                                                                                                                             agreements Bayer and Monsanto have or
                                              E. Digital Agriculture                                  G. Employees
                                                                                                                                                             will enter into with BASF. The
                                                 Section IV of the proposed Final                        As part of the divestitures, over four              Monitoring Trustee will have access to
                                              Judgment also requires Bayer to divest                  thousand Bayer employees who                           all personnel, books, records, and
                                              its digital agriculture business to BASF.               currently support the various divestiture              information necessary to monitor
                                              Currently, the leading global                           businesses will become BASF                            Defendants’ compliance with the
                                              agricultural businesses project that the                employees. These employees will                        proposed Final Judgment, and will serve
                                              industry will move toward ‘‘integrated                  immediately bring critical business                    at the cost and expense of Bayer.
                                              solutions,’’ which are combinations of                  experience to BASF. As an added                           The Monitoring Trustee will file
                                              traditional agricultural input products                 safeguard, Paragraph IV.E of the                       reports every 30 days with the United
                                              that are optimized for use with one                     proposed Final Judgment provides                       States and, as appropriate, the Court
                                              another or combined with other                          BASF the right to hire additional                      until the completion of the required
                                              services. These companies have                          personnel to ensure that BASF can                      divestitures. The reports will set forth
                                              described digital agriculture as the                    become as effective a competitor and                   the efforts by Bayer and Monsanto to
                                              ‘‘glue’’ that binds the products together               innovator as Bayer is today in each of                 comply with their obligations under the
                                              and the core of any future integrated                   the relevant markets. Bayer is required                proposed Final Judgment and the
                                              solution. This trend has led them to                    to make information available to BASF                  Stipulation and Order. After completion
                                              develop digital agriculture products to                 about the employees supporting the                     of the divestitures, the Monitoring
                                              protect their position in traditional                   businesses and assets to be divested,                  Trustee will provide reports as
                                              agricultural markets, including GM seed                 subject to applicable privacy and                      requested by the United States.
                                              markets. To provide BASF with the                       confidentiality protections. BASF then
                                                                                                                                                             I. Firewall
                                              digital agriculture capabilities needed to              will have the right to make offers of
                                              replace Bayer as a competitor going                     employment to these individuals. To                       Section IX of the proposed Final
                                              forward, the proposed Final Judgment                    ensure that BASF will have the ability                 Judgment requires Bayer and BASF to
                                              requires Bayer to divest all assets related             to hire experienced personnel, the                     implement firewall procedures to
                                              to its digital agriculture portfolio and                proposed Final Judgment prohibits                      prevent each company’s confidential
                                              pipeline of products.                                   Bayer from interfering with BASF’s                     business information from being used
                                                                                                      efforts to hire any Bayer or Monsanto                  by the other for any purpose that could
                                              F. Vegetables                                           employees with relevant expertise.                     harm competition. Within twenty days
                                                Finally, Section IV of the proposed                                                                          of the Court approving the Stipulation
                                              Final Judgment requires Bayer to divest                 H. Monitoring Trustee                                  and Order, Bayer and Monsanto must
                                              a comprehensive set of tangible and                       Section VIII of the proposed Final                   submit their planned procedures for
                                              intangible assets representing Bayer’s                  Judgment provides the United States the                maintaining firewalls. Additionally,
                                              entire global vegetable seed business.                  option to seek the appointment of a                    Bayer and BASF must explain the
                                              Bayer’s vegetable seed business operates                Monitoring Trustee subject to the                      requirements of the firewalls to certain
                                              under the Nunhems brand name, a                         Court’s approval. The United States                    officers and other business personnel
                                              business acquired by Bayer in 2002.                     intends to recommend a trustee for the                 responsible for the commercial
                                                The assets to be divested include all                 Court’s approval. The person selected                  relationships between the two
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                                              of Bayer’s vegetable seed breeding                      will have the necessary expertise and                  companies about the required treatment
                                              capabilities, which encompass 24                        experience to ensure that competition                  of confidential business information.
                                              different crops (including tomatoes,                    continues unabated across the various                  Bayer’s and BASF’s adherence to these
                                              onions, carrots, cucumbers, and                         markets. Given the scope of the required               procedures is subject to a semi-annual
                                              watermelons, among others) and                          divestitures, it is critical that the trustee          audit by the Monitoring Trustee. These
                                              approximately 2,400 varieties.                          be in a position to review and resolve                 measures are necessary to ensure that
                                              Additional assets to be divested include                any issues that may arise beginning                    the supply and transition services


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                                              27678                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                              agreements between Bayer and BASF do                    that the divestitures take place                       Judgment will expire ten years from the
                                              not facilitate coordination or other                    expeditiously and that BASF and Bayer                  date of its entry, except that after six (6)
                                              anticompetitive behavior during the                     reduce entanglements as quickly as                     years from the date of its entry, the Final
                                              interim period before BASF becomes                      possible after BASF acquires the                       Judgment may be terminated upon
                                              fully independent of Bayer.                             Divestiture Assets.                                    notice by the United States to the Court
                                                                                                         Paragraph XIV.A provides that the                   and Defendants that the divestitures
                                              J. Prohibition on Recombinations                        United States retains and reserves all                 have been completed and that the
                                                 To ensure that BASF and Bayer                        rights to enforce the provisions of the                continuation of the Final Judgment is no
                                              remain independent competitors,                         proposed Final Judgment, including                     longer necessary or in the public
                                              Section XI of the proposed Final                        rights to seek an order of contempt from               interest.
                                              Judgment prohibits Bayer and BASF                       the Court. Under the terms of this
                                              from recombining any of the Divestiture                 Paragraph, all Defendants, including                   L. Stipulation and Order
                                              Assets with competing Bayer                             BASF, have agreed that in any civil                       Bayer, Monsanto, and BASF have
                                              businesses. First, Bayer is prohibited                  contempt action, any motion to show                    entered into the Stipulation and Order,
                                              from reacquiring any of the Divestiture                 cause, or any other similar action                     which was filed with the Court at the
                                              Assets during the term of the Final                     brought by the United States regarding                 same time as the Complaint, to ensure
                                              Judgment. Second, BASF may not                          an alleged violation of the Final                      that, pending the divestitures, the
                                              acquire from Bayer any assets or                        Judgment, the United States may                        Divestiture Assets are maintained such
                                              businesses that compete with the                        establish the violation and the                        that the divestitures will be effective.
                                              Divestiture Assets. These provisions                    appropriateness of any remedy by a                     The Stipulation and Order also requires
                                              ensure that Bayer and BASF cannot                       preponderance of the evidence, and that                Bayer to hold Monsanto as a separate
                                              undermine the purpose of the proposed                   the Defendants have waived any                         entity until the divestitures are
                                              Final Judgment by later entering into a                 argument that a different standard of                  complete, so that the merger can be
                                              new transaction that would reduce the                   proof should apply. This provision                     unwound if Bayer fails to complete the
                                              competition that the divestitures have                  aligns the standard for compliance                     required divestitures to BASF. This step
                                              preserved. Finally, Section XI prohibits                obligations with the standard of proof                 is necessary in this case because the
                                              Bayer and BASF from entering into any                   that applies to the underlying offense                 divestiture package was crafted
                                              new collaboration, such as a research                   that the compliance commitments                        specifically taking into consideration
                                              and development joint venture, or from                  address.                                               BASF’s existing assets and capabilities,
                                              expanding the scope of any existing                        Paragraph XIV.B provides additional                 and if BASF is unable to acquire the
                                              collaboration, involving the Divestiture                clarification regarding the interpretation             assets, simply divesting the package to
                                              Assets. This provision prevents Bayer                   of the provisions of the proposed Final                another purchaser would not preserve
                                              and BASF from circumventing the                         Judgment. The proposed Final Judgment                  competition. The Stipulation and Order
                                              purpose of the proposed Final Judgment                  was drafted to restore all competition                 also binds all three defendants to the
                                              by, for example, entering into a                        that would otherwise be harmed by the                  terms of the proposed Final Judgment
                                              partnership to jointly develop new                      merger. The Defendants agree that they                 pending the Judgment’s entry by the
                                              traits, which could reduce or eliminate                 will abide by the proposed Final                       Court.
                                              BASF’s incentive to innovate                            Judgment, and that they may be held in
                                              independently in some or all of the                     contempt of this Court for failing to                  IV. REMEDIES AVAILABLE TO
                                              relevant markets. The provision permits                 comply with any provision of the                       POTENTIAL PRIVATE LITIGANTS
                                              BASF and Bayer to engage in certain                     proposed Final Judgment that is stated                   Section 4 of the Clayton Act, 15
                                              ordinary-course-of-business commercial                  specifically and in reasonable detail, as              U.S.C. § 15, provides that any person
                                              relationships, such as crop protection                  interpreted in light of this                           who has been injured as a result of
                                              product supply agreements. They also                    procompetitive purpose.                                conduct prohibited by the antitrust laws
                                              may engage in other collaborations if                      Paragraph XIV.C of the proposed                     may bring suit in federal court to
                                              approved by the United States in its sole               Final Judgment further provides that                   recover three times the damages the
                                              discretion.                                             should the Court find in an enforcement                person has suffered, as well as costs and
                                                                                                      proceeding that the Defendants have                    reasonable attorneys’ fees. Entry of the
                                              K. Enforcement Provisions                               violated the Final Judgment, the United                proposed Final Judgment will neither
                                                The proposed Final Judgment                           States may apply to the Court for a one-               impair nor assist the bringing of any
                                              contains provisions designed to promote                 time extension of the Final Judgment,                  private antitrust damages action. Under
                                              compliance and make the enforcement                     together with such other relief as may be              the provisions of Section 5(a) of the
                                              of consent decrees as effective as                      appropriate. In addition, in order to                  Clayton Act, 15 U.S.C. § 16(a), the
                                              possible. As set forth in the Stipulation               compensate American taxpayers for any                  proposed Final Judgment has no prima
                                              and Order, BASF has agreed to be joined                 costs associated with the investigation                facie effect in any subsequent lawsuit
                                              to this action for purposes of the                      and enforcement of violations of the                   that may be brought against Defendants.
                                              divestiture. Including BASF is                          proposed Final Judgment, Paragraph
                                              appropriate because, after extensive                    XIV.C provides that in any successful                  V. PROCEDURES AVAILABLE FOR
                                              analysis, the United States has                         effort by the United States to enforce                 MODIFICATION OF THE PROPOSED
                                              determined that BASF is a necessary                     this Final Judgment against a Defendant,               FINAL JUDGMENT
                                              party to effectuate complete relief; the                whether litigated or resolved prior to                    The United States and Defendants
                                              divestiture package was crafted                         litigation, that Defendant agrees to                   have stipulated that the proposed Final
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                                              specifically taking into consideration                  reimburse the United States for                        Judgment may be entered by the Court
                                              BASF’s existing assets and capabilities,                attorneys’ fees, experts’ fees, or costs               after compliance with the provisions of
                                              and divesting the package to another                    incurred in connection with any                        the APPA, provided that the United
                                              purchaser would not preserve                            enforcement effort, including the                      States has not withdrawn its consent.
                                              competition. Thus, as discussed above,                  investigation of the potential violation.              The APPA conditions entry upon the
                                              the proposed Final Judgment imposes                        Finally, Section XV of the proposed                 Court’s determination that the proposed
                                              certain obligations on BASF to ensure                   Final Judgment provides that the Final                 Final Judgment is in the public interest.


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                                                                           Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices                                                      27679

                                                 The APPA provides a period of at                     judgments in antitrust cases brought by                among other things, the relationship
                                              least 60 days preceding the effective                   the United States be subject to a 60-day               between the remedy secured and the
                                              date of the proposed Final Judgment                     comment period, after which the court                  specific allegations set forth in the
                                              within which any person may submit to                   shall determine whether entry of the                   government’s complaint, whether the
                                              the United States written comments                      proposed Final Judgment ‘‘is in the                    decree is sufficiently clear, whether
                                              regarding the proposed Final Judgment.                  public interest.’’ 15 U.S.C. § 16(e)(1). In            enforcement mechanisms are sufficient,
                                              Any person who wishes to comment                        making such a determination, the court,                and whether the decree may positively
                                              should do so within 60 days of the date                 in accordance with the statute as                      harm third parties. See Microsoft, 56
                                              of publication of this Competitive                      amended in 2004, is required to                        F.3d at 1458–62. With respect to the
                                              Impact Statement in the Federal                         consider:                                              adequacy of the relief secured by the
                                              Register, or the last date of publication               (A) the competitive impact of such judgment,           decree, a court may not ‘‘engage in an
                                              in a newspaper of the summary of this                     including termination of alleged violations,         unrestricted evaluation of what relief
                                              Competitive Impact Statement,                             provisions for enforcement and                       would best serve the public.’’ United
                                              whichever is later. All comments                          modification, duration of relief sought,             States v. BNS, Inc., 858 F.2d 456, 462
                                              received during this period will be                       anticipated effects of alternative remedies          (9th Cir. 1988) (quoting United States v.
                                                                                                        actually considered, whether its terms are           Bechtel Corp., 648 F.2d 660, 666 (9th
                                              considered by the United States, which
                                                                                                        ambiguous, and any other competitive                 Cir. 1981)); see also Microsoft, 56 F.3d
                                              remains free to withdraw its consent to                   considerations bearing upon the adequacy
                                              the proposed Final Judgment at any                        of such judgment that the court deems
                                                                                                                                                             at 1460–62; United States v. Alcoa, Inc.,
                                              time prior to the Court’s entry of                        necessary to a determination of whether              152 F. Supp. 2d 37, 40 (D.D.C. 2001);
                                              judgment. The comments and the                            the consent judgment is in the public                InBev, 2009 U.S. Dist. LEXIS 84787, at
                                              response of the United States will be                     interest; and                                        *3. Courts have held that:
                                              filed with the Court. In addition,                      (B) the impact of entry of such judgment               [t]he balancing of competing social and
                                              comments will be posted on the                            upon competition in the relevant market or           political interests affected by a proposed
                                                                                                        markets, upon the public generally and               antitrust consent decree must be left, in the
                                              Antitrust Division’s internet website                     individuals alleging specific injury from
                                              and, in certain circumstances, published                                                                       first instance, to the discretion of the
                                                                                                        the violations set forth in the complaint            Attorney General. The court’s role in
                                              in the Federal Register.                                  including consideration of the public                protecting the public interest is one of
                                                 Written comments should be                             benefit, if any, to be derived from a                insuring that the government has not
                                              submitted by mail to:                                     determination of the issues at trial.                breached its duty to the public in consenting
                                              Kathleen S. O’Neill                                     15 U.S.C. § 16(e)(1)(A) & (B). In                      to the decree. The court is required to
                                              Chief, Transportation, Energy &                         considering these statutory factors, the               determine not whether a particular decree is
                                                 Agriculture Section                                  court’s inquiry is necessarily a limited               the one that will best serve society, but
                                                                                                                                                             whether the settlement is ‘‘within the reaches
                                              Antitrust Division                                      one as the government is entitled to                   of the public interest.’’ More elaborate
                                              United States Department of Justice                     ‘‘broad discretion to settle with the                  requirements might undermine the
                                              450 5th Street, NW, Suite 8000                          defendant within the reaches of the                    effectiveness of antitrust enforcement by
                                              Washington, DC 20530                                    public interest.’’ United States v.                    consent decree.
                                                 The proposed Final Judgment                          Microsoft Corp., 56 F.3d 1448, 1461                    Bechtel, 648 F.2d at 666 (emphasis
                                              provides that the Court retains                         (D.C. Cir. 1995); see generally United                 added) (citations omitted).3 In
                                              jurisdiction over this action, and the                  States v. SBC Commc’ns, Inc., 489 F.                   determining whether a proposed
                                              parties may apply to the Court for any                  Supp. 2d 1, 15–17 (D.D.C. 2007)                        settlement is in the public interest, a
                                              necessary or appropriate modification,                  (assessing public interest standard                    court ‘‘must accord deference to the
                                              interpretation, or enforcement of the                   under the Tunney Act); United States v.                government’s predictions about the
                                              Final Judgment.                                         U.S. Airways Group, Inc., 38 F. Supp. 3d               efficacy of its remedies, and may not
                                                                                                      69, 75 (D.D.C. 2014) (explaining that the              require that the remedies perfectly
                                              VI. ALTERNATIVES TO THE                                 ‘‘court’s inquiry is limited’’ in Tunney
                                              PROPOSED FINAL JUDGMENT                                                                                        match the alleged violations.’’ SBC
                                                                                                      Act settlements); United States v. InBev               Commc’ns, 489 F. Supp. 2d at 17; see
                                                 The United States considered, as an                  N.V./S.A., No. 08–1965 (JR), 2009–2                    also U.S. Airways, 38 F. Supp. 3d at 75
                                              alternative to the proposed Final                       Trade Cas. (CCH) ¶ 76,736, 2009 U.S.                   (noting that a court should not reject the
                                              Judgment, seeking preliminary and                       Dist. LEXIS 84787, at *3, (D.D.C. Aug.                 proposed remedies because it believes
                                              permanent injunctions against the                       11, 2009) (noting that the court’s review              others are preferable); Microsoft, 56 F.3d
                                              merger and proceeding to a full trial on                of a consent judgment is limited and                   at 1461 (noting the need for courts to be
                                              the merits. The United States is                        only inquires ‘‘into whether the                       ‘‘deferential to the government’s
                                              satisfied, however, that the relief in the              government’s determination that the                    predictions as to the effect of the
                                              proposed Final Judgment will preserve                   proposed remedies will cure the
                                                                                                                                                             proposed remedies’’); United States v.
                                              competition in each relevant market in                  antitrust violations alleged in the
                                                                                                                                                             Archer-Daniels-Midland Co., 272 F.
                                              the United States. Thus, the proposed                   complaint was reasonable, and whether
                                                                                                                                                             Supp. 2d 1, 6 (D.D.C. 2003) (noting that
                                              Final Judgment will protect competition                 the mechanisms to enforce the final
                                                                                                                                                             the court should grant due respect to the
                                              as effectively as, and will achieve all or              judgment are clear and manageable’’).2
                                                                                                         As the United States Court of Appeals               United States’ prediction as to the effect
                                              substantially all of the relief the United
                                              States would have obtained through,                     for the District of Columbia Circuit has                 3 Cf. BNS, 858 F.2d at 464 (holding that the

                                              litigation, but avoids the time, expense,               held, under the APPA a court considers,                court’s ‘‘ultimate authority under the [APPA] is
                                              and uncertainty of a full trial on the                                                                         limited to approving or disapproving the consent
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                                                                                                        2 The 2004 amendments substituted ‘‘shall’’ for      decree’’); United States v. Gillette Co., 406 F. Supp.
                                              merits.                                                 ‘‘may’’ in directing relevant factors for courts to    713, 716 (D. Mass. 1975) (noting that, in this way,
                                                                                                      consider and amended the list of factors to focus on   the court is constrained to ‘‘look at the overall
                                              VII. STANDARD OF REVIEW UNDER                           competitive considerations and to address              picture not hypercritically, nor with a microscope,
                                              THE APPA FOR THE PROPOSED                               potentially ambiguous judgment terms. Compare 15       but with an artist’s reducing glass’’). See generally
                                              FINAL JUDGMENT                                          U.S.C. § 16(e) (2004), with 15 U.S.C. § 16(e)(1)       Microsoft, 56 F.3d at 1461 (discussing whether ‘‘the
                                                                                                      (2006); see also SBC Commc’ns, 489 F. Supp. 2d at      remedies [obtained in the decree are] so
                                               The Clayton Act, as amended by the                     11 (concluding that the 2004 amendments ‘‘effected     inconsonant with the allegations charged as to fall
                                              APPA, requires that proposed consent                    minimal changes’’ to Tunney Act review).               outside of the ‘reaches of the public interest’ ’’).



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                                              27680                        Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices

                                              of proposed remedies, its perception of                 ‘public interest’ is not to be measured by             the recognition that the court’s ‘‘scope
                                              the market structure, and its views of                  comparing the violations alleged in the                of review remains sharply proscribed by
                                              the nature of the case).                                complaint against those the court                      precedent and the nature of Tunney Act
                                                 Courts have greater flexibility in                   believes could have, or even should                    proceedings.’’ SBC Commc’ns, 489 F.
                                              approving proposed consent decrees                      have, been alleged.’’). Because the                    Supp. 2d at 11.4 A court can make its
                                              than in crafting their own decrees                      ‘‘court’s authority to review the decree               public interest determination based on
                                              following a finding of liability in a                   depends entirely on the government’s                   the competitive impact statement and
                                              litigated matter. ‘‘[A] proposed decree                 exercising its prosecutorial discretion by             response to public comments alone.
                                              must be approved even if it falls short                 bringing a case in the first place,’’ it               U.S. Airways, 38 F. Supp. 3d at 76.
                                              of the remedy the court would impose                    follows that ‘‘the court is only
                                              on its own, as long as it falls within the              authorized to review the decree itself,’’              VIII. DETERMINATIVE DOCUMENTS
                                              range of acceptability or is ‘within the                and not to ‘‘effectively redraft the                     There are no determinative materials
                                              reaches of public interest.’’’ United                   complaint’’ to inquire into other matters              or documents within the meaning of the
                                              States v. Am. Tel. & Tel. Co., 552 F.                   that the United States did not pursue.                 APPA that were considered by the
                                              Supp. 131, 151 (D.D.C. 1982) (citations                 Microsoft, 56 F.3d at 1459–60. As a                    United States in formulating the
                                              omitted) (quoting United States v.                      court in this district confirmed in SBC                proposed Final Judgment.
                                              Gillette Co., 406 F. Supp. 713, 716 (D.                 Communications, courts ‘‘cannot look
                                              Mass. 1975)), aff’d sub nom. Maryland                   beyond the complaint in making the                       Dated: May 29, 2018
                                              v. United States, 460 U.S. 1001 (1983);                 public interest determination unless the               Respectfully Submitted,
                                              see also U.S. Airways, 38 F. Supp. 3d at                complaint is drafted so narrowly as to                 Scott I. Fitzgerald
                                              76 (noting that room must be made for                   make a mockery of judicial power.’’ 489                Robert A. Lepore
                                              the government to grant concessions in                  F. Supp. 2d at 15.                                     Katherine A. Celeste
                                              the negotiation process for settlements                    In its 2004 amendments, Congress                    Jeremy Evans (D.C. Bar #478097)
                                              (citing Microsoft, 56 F.3d at 1461));                   made clear its intent to preserve the                  Attorneys for the United States
                                              United States v. Alcan Aluminum Ltd.,                   practical benefits of utilizing consent                U.S. Department of Justice
                                              605 F. Supp. 619, 622 (W.D. Ky. 1985)                   decrees in antitrust enforcement, adding               Antitrust Division
                                              (approving the consent decree even                      the unambiguous instruction that                       450 5th Street, NW, Suite 8000
                                              though the court would have imposed a                   ‘‘[n]othing in this section shall be                   Washington, DC 20530
                                              greater remedy). To meet this standard,                 construed to require the court to                      Tel.: (202) 353–3863
                                              the United States ‘‘need only provide a                 conduct an evidentiary hearing or to                   Fax: (202) 616–2441
                                                                                                                                                             E-mail: scott.fitzgerald@usdoj.gov
                                              factual basis for concluding that the                   require the court to permit anyone to
                                              settlements are reasonably adequate                     intervene.’’ 15 U.S.C. § 16(e)(2); see also            [FR Doc. 2018–12202 Filed 6–12–18; 8:45 am]
                                              remedies for the alleged harms.’’ SBC                   U.S. Airways, 38 F. Supp. 3d at 76                     BILLING CODE 4410–11–P
                                              Commc’ns, 489 F. Supp. 2d at 17.                        (indicating that a court is not required
                                                                                                                                                                4 See United States v. Enova Corp., 107 F. Supp.
                                                 Moreover, the court’s role under the                 to hold an evidentiary hearing or to
                                              APPA is limited to reviewing the                        permit intervenors as part of its review               2d 10, 17 (D.D.C. 2000) (noting that the ‘‘Tunney
                                                                                                                                                             Act expressly allows the court to make its public
                                              remedy in relationship to the violations                under the Tunney Act). The language                    interest determination on the basis of the
                                              that the United States has alleged in its               wrote into the statute what Congress                   competitive impact statement and response to
                                              complaint, and does not authorize the                   intended when it enacted the Tunney                    comments alone’’); United States v. Mid-Am.
                                              court to ‘‘construct [its] own                          Act in 1974, as Senator Tunney                         Dairymen, Inc., No. 73–CV–681–W–1, 1977–1 Trade
                                              hypothetical case and then evaluate the                 explained: ‘‘[t]he court is nowhere                    Cas. (CCH) ¶ 61,508, at 71,980, *22 (W.D. Mo. 1977)
                                              decree against that case.’’ Microsoft, 56               compelled to go to trial or to engage in               (‘‘Absent a showing of corrupt failure of the
                                              F.3d at 1459; see also U.S. Airways, 38                 extended proceedings which might have                  government to discharge its duty, the Court, in
                                                                                                                                                             making its public interest finding, should . . .
                                              F. Supp. 3d at 75 (noting that the court                the effect of vitiating the benefits of
                                                                                                                                                             carefully consider the explanations of the
                                              must simply determine whether there is                  prompt and less costly settlement                      government in the competitive impact statement
                                              a factual foundation for the                            through the consent decree process.’’                  and its responses to comments in order to
                                              government’s decisions such that its                    119 Cong. Rec. 24,598 (1973) (statement                determine whether those explanations are
                                              conclusions regarding the proposed                      of Sen. Tunney). Rather, the procedure                 reasonable under the circumstances.’’); S. Rep. No.
                                              settlements are reasonable); InBev, 2009                for the public interest determination is               93–298, at 6 (1973) (‘‘Where the public interest can
                                              U.S. Dist. LEXIS 84787, at *20 (‘‘[T]he                 left to the discretion of the court, with              be meaningfully evaluated simply on the basis of
                                                                                                                                                             briefs and oral arguments, that is the approach that
                                                                                                                                                             should be utilized.’’).
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Document Created: 2018-06-12 23:59:06
Document Modified: 2018-06-12 23:59:06
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation83 FR 27652 

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